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Pareto Energy Conference 2020Oslo, 16 September 2020
THIS PRESENTATION (THE “INFORMATION MATERIAL”) HAS BEEN PRODUCED AND
DELIVERED BY NORWEGIAN ENERGY COMPANY ASA (THE “COMPANY”). THIS
INFORMATION MATERIAL DOES NOT CONSTITUTE AN OFFER, INVITATION OR
SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE OR SELL ANY SHARES IN THE
COMPANY.
THE COMPANY DOES NOT MAKE ANY UNDERTAKING, REPRESENTATION OR
WARRANTY (EXPRESS OR IMPLIED) AS TO THE ACCURACY OR COMPLETENESS
OF THE INFORMATION (WHETHER WRITTEN OR ORAL AND WHETHER INCLUDED
IN THIS INFORMATION MATERIAL OR ELSEWHERE) CONCERNING THE COMPANY
OR OTHER MATTERS DESCRIBED HEREIN. NEITHER THE COMPANY NOR ANY OF
ITS PARENT OR SUBSIDIARY UNDERTAKINGS OR ANY SUCH PERSON’S
AFFILIATES, OFFICERS, EMPLOYEES OR ADVISERS ACCEPT ANY LIABILITY
WHATSOEVER ARISING DIRECTLY OR INDIRECTLY FROM THE USE OF THIS
INFORMATION MATERIAL OR OTHERWISE IN CONNECTION WITH THE MATTERS
DESCRIBED HEREIN.
THE DISTRIBUTION OF THIS INFORMATION MATERIAL IN CERTAIN JURISDICTIONS
IS RESTRICTED BY LAW. THIS INFORMATION MATERIAL IS NOT FOR DISTRIBUTION
OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO ANY JURISDICTION IN
WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL.
THIS INFORMATION MATERIAL MAY CONTAIN CERTAIN FORWARD-LOOKING
STATEMENTS RELATING TO THE BUSINESS, FINANCIAL PERFORMANCE AND
RESULTS OF THE COMPANY AND/OR THE INDUSTRY IN WHICH IT OPERATES.
FORWARD-LOOKING STATEMENTS CONCERN FUTURE CIRCUMSTANCES AND
RESULTS AND OTHER STATEMENTS THAT ARE NOT HISTORICAL FACTS,
SOMETIMES IDENTIFIED BY THE WORDS “BELIEVES”, EXPECTS”, “PREDICTS”,
“INTENDS”, “PROJECTS”, “PLANS”, “ESTIMATES”, “AIMS”, “FORESEES”,
“ANTICIPATES”, “TARGETS”, AND SIMILAR EXPRESSIONS. THE FORWARD-
LOOKING STATEMENTS CONTAINED IN THIS INFORMATION MATERIAL, INCLUDING
ASSUMPTIONS, OPINIONS AND VIEWS OF THE COMPANY OR CITED FROM THIRD
PARTY SOURCES ARE SOLELY OPINIONS AND FORECASTS WHICH ARE SUBJECT
TO RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL
EVENTS TO DIFFER MATERIALLY FROM ANY ANTICIPATED DEVELOPMENT.
NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARY UNDERTAKINGS OR ANY
SUCH PERSON’S AFFILIATES, OFFICERS OR EMPLOYEES PROVIDES ANY
ASSURANCE THAT THE ASSUMPTIONS UNDERLYING SUCH FORWARD-LOOKING
STATEMENTS ARE FREE FROM ERRORS, NOR DOES ANY OF THEM ACCEPT ANY
RESPONSIBILITY FOR THE FUTURE ACCURACY OF THE OPINIONS EXPRESSED IN
THIS INFORMATION MATERIAL OR THE ACTUAL OCCURRENCE OF THE
FORECASTED DEVELOPMENTS. THE COMPANY ASSUME NO OBLIGATION TO
UPDATE ANY FORWARD-LOOKING STATEMENTS OR TO CONFIRM THESE
FORWARD-LOOKING STATEMENTS TO OUR ACTUAL RESULTS.
BY ATTENDING OR RECEIVING THIS INFORMATION MATERIAL YOU
ACKNOWLEDGE THAT YOU WILL BE RESPONSIBLE FOR YOUR OWN ASSESSMENT
OF THE MARKET AND THE MARKET POSITION OF THE COMPANY AND THAT YOU
WILL CONDUCT YOUR OWN ANALYSIS AND BE SOLELY RESPONSIBLE FOR
FORMING YOUR OWN VIEW OF THE POTENTIAL FUTURE PERFORMANCE OF THE
COMPANY’S BUSINESS AND A POTENTIAL INVESTMENT IN THE COMPANY.
THE CONTENTS OF THIS INFORMATION MATERIAL ARE NOT TO BE CONSTRUED
AS FINANCIAL, LEGAL, BUSINESS, INVESTMENT, TAX OR OTHER PROFESSIONAL
ADVICE. THIS INFORMATION MATERIAL SPEAKS AS OF 20 MAY 2020. NEITHER THE
DELIVERY OF THIS INFORMATION MATERIAL NOR ANY FURTHER DISCUSSIONS
OF THE COMPANY WITH ANY OF THE RECIPIENTS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
THIS INFORMATION MATERIAL IS SUBJECT TO NORWEGIAN LAW, AND ANY
DISPUTE ARISING IN RESPECT OF THIS INFORMATION MATERIAL IS SUBJECT TO
THE EXCLUSIVE JURISDICTION OF NORWEGIAN COURTS WITH OSLO DISTRICT
COURT AS EXCLUSIVE LEGAL VENUE
Disclaimer
2
AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS
COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,
PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY
STATEMENTS AND INFORMATION IN THIS INVESTOR PRESENTATION, INCLUDING,
AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY’S
BUSINESS, SEGMENTS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING,
MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE
GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN
DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN
COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY
EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS. SHOULD ONE
OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD
UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY
MATERIALLY FROM THOSE DESCRIBED IN THIS INVESTOR PRESENTATION. THE
COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO
UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS INVESTOR
PRESENTATION.
Important Information
3
Risk Management
Ticker “NOR”
Second largest
producer in Denmark
Significant
Reserves Base
Predictable
Conservative Capital Structure
Noreco – A Transformed North Sea Company
4
• A transformed E&P company listed on Oslo Stock Exchange
• Successful acquisition of Shell’s 36.8% interest in the Danish Underground
Consortium (“DUC”) in 2019
• Production of c.30mboepd, rising to c.50mboepd after Tyra completion
• 2P reserves of 209 mmboe and contingent reserves of ~200 mmboe1
• Company ambition to deliver growth in reserves and resources
• Successful risk mitigating steps taken
• Cash flow visibility and protection by volume guarantee and price hedging
• Production consistently in line with quarterly guidance
• Stable production from DUC assets throughout Tyra Redevelopment
• Diversified sources of funding
• No debt maturities or capital repayments until the completion of the Tyra project
✓
✓
✓
✓
✓
✓
1) Company estimates
1) Senergy (Lloyd’s Register per 31 December 2018)
Introduction to DUC
5
Tyra
Dan
Halfdan
Gorm
Four production hubs and 11 producing fields
20.0%
43.2% Operator
36.8%
▪ JV between Total, Noreco and Nordsøfonden. It produced 85%
of liquids and 94% of gas on the Danish Continental Shelf
(“DCS”) in 2018
▪ All fields operated by Total, the largest producer on the DCS
following the acquisitions of 31.2% from Maersk (Aug-17) and
12.0% from Chevron (Sept-18)
▪ Owns essential infrastructure on the DCS, including key
production hubs and pipelines
▪ Tyra hub, the centre of Denmark’s energy infrastructure - to
unlock gross potential in excess of 200 mmboe
The Danish Underground Consortium (“DUC”)
1) Adjusted EBITDA, please see quarterly reports
▪ Increase of 2P reserves
▪ 2020 RBL Redetermination ~ 25% increase of borrowing
base
▪ Identification of value adding projects within portfolio
▪ Noreco has actively sought to reduce risk when
commercially attractive
▪ Buyback of 438,161 shares during 2020
11 Months of Ownership - Significant Value Creation
6
August 2019 – June 2020
615USDm
439USDm
177percent
67.5USD/barrel
337USDm
Revenue
Adjusted EBITDA1
Average oil price 2020
Operating Cash Flow
Reserves Replacement
Building a long-term value proposition:
1) Reserve Replacement Ratio for 2P reserves among selected publicly listed North Sea focused E&P companies for 2019, based on individual disclosures
2) Company estimates
In line with the Company’s objectives Noreco has more than fully
replaced its reserves during 2019
2019 Reserves Development Leading reserve replacement in 20191
2P
209mmboe
contingent2
~200mmboe
Total
>400mmboe
Total reserves and contingent resources195,3
208,9
17,6
31,2
YE 2018 Reserves 2019 Production Additions YE 2019 Reserves
177%
150%
80%
76%
57%
Noreco
Lundin Energy
Aker BP
Equinor
OKEA
7
Increase of 2P Reserves - Close to 200% RRR for 2019
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
1) Company estimates
Sanctioned Production to Increase Significantlywith a selection of mature projects having the ability to sustain production levels
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Sanctioned Oil
Sanctioned
Gas
Mature
projectsContingent
50
mboepd
Oil Production1
Gas Production1
Total Production1
SanctionedMature projects
Contingent
Sanctioned
Mature projects Contingent
Tyra Redevelopment – Enabling volumes from new
projects & tie-ins
Overview of the Tyra hub redevelopment project
91) Gross capex and abex of DKK 17bn and 4bn, respectively. Share net to Noreco of 36.8% and USDDKK assumed at 6.8; 2) Gross potential to be unlocked of >200 mmboe; 3) Capex and abex of DKK 21bn divided by
gross potential of 200 mmboe and USDDKK assumed at 6.8; 3) Subject to certain conditions
▪ The Tyra hub has contributed to a significant part of Danish oil
and gas production for more than 35 years (processing 90% of
the nation’s gas)
▪ The Tyra hub requires redevelopment due to compaction of the
chalk reservoir, the seabed has subsided by six metres over 30
years
▪ The 2017 North Sea Agreement provides strong government
support for the redevelopment including an improved
hydrocarbon tax regime on investments
▪ The redevelopment will fully modernise and elevate the
facilities, the project was approved by the DUC partners in 2017
20 yearsPRODUCTION
POST PROJECT
USD
1,140mNET CAPEX
and ABEX1
>74MMBOE NET
TO NORECO2
USD
15.4CAPEX PER
BOE3
Photo: Tyra East lift, August 2020
Broad Spectrum of
Growth Opportunities
Material Reserves &
Resources Base
Substantial
Production
Near-Term Growth
Through Tyra
Cashflow Secured
Through Hedging
Strong Financial Position
Noreco: Attractive Long-Term Value Proposition
10
✓
✓
✓
✓
✓
✓
• 2P reserves of 209 mmboe with 177% reserves replacement ratio during 2019
• 2C resources of approx. 200 mmboe with additional projects being progressed
• Consistent production providing significant operational cashflow
• Low decline rates with opportunities to offset through investment
• Noreco expected to produce circa 50 mboepd following Tyra restart
• Project forecast on time and on budget
• Low risk organic growth identified in high value, low capex projects within the DUC
• Advantageous tax balances support potential inorganic value-additive growth
• Liquids production fully price hedged in 2020 at prices significantly above market
• Material volumes already hedged for 2021 and 2022 at approx. USD 56 per boe
• Guaranteed production levels with Shell underpin 2020 cashflow
• Substantial liquidity supported by upward RBL borrowing base re-determination
• No debt maturities or capital repayments until the completion of the Tyra project
