PA Resources AGM 22 May 2012

PA Resources AGM 2012

Annual General Meeting

Bo Askvik, President & CEO

Stockholm, 22 May 2012

PA Resources where we are today

2

» No value in the North Sea

asset portfolio

» Marginal value recognised

in Block I, Equatorial Guinea

» High investment level,

capex/produced barrel

equal to 80 USD

» New play discoveries in

Denmark as operator

» Aseng investments recovered

after 9 months - strong future

cashflow

» Significantly lower investment

level, capex/produced barrel

equal to 6 USD in Q1 2012

2010 Today

Focusing on Africa and North Sea

* Million barrels of oil equivalents, Working Interest figures

per 31 Dec. 2011

KEY FACTS:

• Oil and gas company with operations and

assets in nine countries

• Exploration, development and production

portfolio - key infrastructure assets in Africa

• Oil production in Equatorial Guinea,

Republic of Congo (Brazzaville) and Tunisia

• Average production of 8,700 bopd in Q1

2012

• 60.2 million mmboe in 2P reserves and

145 mmboe in contingent resources*

• 130 employees in Tunisia, the UK and

Sweden

25 oil and gas licences

6 producing fields

9 potential commercial

discoveries

Operator of 12 licences

Production

Development

Exploration

3

Infrastructure hub

Shareholder structure per March 2012

4

Number of shares Capital/votes

AVANZA PENSION 53,990,324 8.5%

NORDNET PENSIONSFÖRSÄKRING 21,657,208 3.4%

LÄNSFÖRSÄKRINGAR FONDER AB 17,270,874 2.7%

CBNY-DFA-INT SML CAP V 15,454,377 2.4%

ROBUR FÖRSÄKRING 10,883,241 1.7%

AB TRACTION 10,778,014 1.7%

VOB & T HOLDING AB 10,000,000 1.6%

SEB S.A., W8IMY 9,378,446 1.5%

JP MORGAN BANK 7,765,220 1.2%

JPM CHASE NA 7,724,045 1.2%

Total - 10 largest shareholders 164,901,749 25.9%

Total - other shareholders 472,575,144 74.1%

Total number of shares 637,476,893 100%

• The share listed on NASDAQ

OMX Stockholm (Mid Cap)

• Market capitalization of

approx. SEK 920 million

• Enterprise value of approx.

SEK 4.3 billion and

Nomination committee in 2011:

• Länsförsäkringar

• AB Traction

• Folksam

Financial Review

Q1

Macro perspective

• Geopolitical uncertainty continues

• European debt crisis and outlook of

global economy coming year uncertain

• Lack of extra production capacity

• Demand still driven by growth

economies such as China and India

• Transport sector increasing in pace

with population and GDP

• It is getting more difficult to find oil

• Existing producing fields have a natural

decline rate of 4% a year

• +40 million barrels per day needed from

new producing fields by 2030

6

0

20

40

60

80

100

120

140

160

2006 2007 2008 2009 2010 2011 2012

Brent price trend 2006 - 2012 (USD per barrel)

Production trend and update

CONGO: Azurite

• Marked decline in one well since February

2012, well flowing at minimal rate

• Technical and economic analysis of remedial

options ongoing

• One week shutdown for annual field

maintenance planned for in late May 2012

EG: Aseng

• Higher target level of around 60,000 boepd

reached in early March 2012

• Fifth production well on stream - all wells

contributing fully, gas re-injection fully

commissioned

• Frequent liftings

EG: Alen

• Delopment project on plan for production start

2013, significant cost synergies reducing opex

Average production per country/bopd

0

2 000

4 000

6 000

8 000

10 000

12 000

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012

Congo: Azurite EG: Aseng Tunisia: Didon & Onshore

7

8

Production and sales

Average quarterly production/bopd bopd Full Year

2011

Q1

2012

APRIL

2012

West Africa 5,300 6,200 5,700

North Africa 3,300 2,500 2,700

Group Total 8,600 8,700 8,400

Average sales price USD/bbl LIFTINGS IN 2012: Q1 - EARLY APRIL

• 546,000 bbls from Aseng and Tunisia in Q1

• 520,000 bbls from Azurite on 4 April (Q2 2012)

71

78 72

82

97 109 106 104

120

77 79 78 85

106 117 113 109

119

20

40

60

80

100

120

140

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

PA Resources

Brent

0

2 000

4 000

6 000

8 000

10 000

12 000

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Earnings and key ratios

9

Q1 2012 Q4 2011 FY 2011 FY 2010

Production (bopd) 8,700 8,400 8,600 10,700

Oil price (USD/barrel) 120 104 103 76

Revenue (SEK million) 650 535 2,154 2,227

EBITDA (SEK million) 395 306 1,295 1,276

EBITDA margin 60.8% 57.2% 60.1% 57.3%

Profit before tax (SEK million)* 68 11 158 179

Profit for the period

(SEK million)*

-31 -96 -326 -316

Earnings per share (SEK) -0.05 -2.91 -3.27 -0.61

* Figures for 2011 exclude non-cash, one-off costs of SEK 2,035 million before tax and

SEK 1,758 million after tax.

1,613

32

240 - 375

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2011 2012

SE

K m

illi

on

Significantly lower capex in 2012

Actual Forecasted

Capex 2011 - 2012

Tunisia: Zarat Elyssa Q4 2012/2013 Appraisal/1

Tunisia: Makthar 2013 Exploration/1

EG: Block H Aleta Q4 2012/2013 Exploration/1

DK: 12/06 Lille John 2013 Appraisal/1

Drilling program/planned wells 2012-2013

KEY COMMENTS

• 2012 forecast of SEK 240-375 million

• Capex of SEK 32 million in Q1

• Continued low investment activity in 2012

10

Improved cash flow

11

SEK million

Q1

2012

Q4

2011

FY

2011

FY

2010

Operating cash flow 175 -106 812 416

of which income

taxes paid

-3 -7 -45 -230

CAPEX -32 -135 -1,613 1,585

Financing activities -13 36 -408 2,321

Net cash flow 131 -204 -1,209 1,152

AZURITE LIFTING – Q2 2012

• Azurite lifting on 4 April adds

SEK 400 million cash flow, and

reduces net debt

• PA Resources’ next planned

lifting from Azurite in early 2013

Refinancing activities

• 5 year senior unsecured NOK 900

million bond loan issued in March

2011 to refinance maturing loans

in 2011 and 2012

• Total amortizations of net SEK

408 million in 2011

• As per 25 April net debt reduced

by SEK 580 million since year end

amounting to SEK 3.4 billion

• Next maturity in October 2013

12

0

200

400

600

800

1000

1200

May - Dec.2012

2013 2014 2015 2016

Maturity structure Bonds and convertibels (SEK million)

Bond (NOK 900 million) Convertible Bond Bond (SEK 850 million)

Reduced debt

13

KEY COMMENTS – Q4 2011

• Substantial reduction in 2P

reserves on Azurite field

resulted in impairment of SEK

1,436 million

• Write-down of SEK 599 million

related to Didon North and

divestment of El Bibane and

Ezzaouia fields in Tunisia

Balance Sheet (SEK million) 2011 2010

Non-current assets 7 910 8 952

Current assets 981 1 946

Total assets 8 892 10 898

Equity attributable to owners

of the parent 3 270 5 250

Non-current liabilities 4 031 3 606

Current liabilities 1 592 2 042

Total equity and liabilities 8 892 10 898

25 April* Q1 2012 Q4 2011 Covenant

Book Equity (SEK million) 2,994 2,994 3,270 >2,000

Book Equity to

Capital Employed 46% 43% 45% >40%

Net debt (SEK million) 3,400 3,803 3,982 N/A

Covenants and net debt

* Assuming fixed closing rate per 31 March

Operational update

Q1

IMPORTANT EVENTS

Equatorial Guinea:

• Early production start at the Aseng field

in November 2011, adding frequent

cash flow from Q1 2012

• Alen development in progress adding

significant cost synergies to PAR,

production start in 2013

• New operator for Block H

Congo:

• Azurite development completed with lower

production than expected, booked 2P

reserves written down by 6 mmboe

• Exploration well on Marine XIV found

non-commercial hydrocarbons

Highlights 2011: West Africa

15

12.2 20

62

0

10

20

30

40

50

60

70

2P Reserves ContingentResources

RiskedProspectiveResources

West Africa Reserves and resources (mmboe)

SEK 780 million in investments

SEK 3,304 million in non-current assets

5,300 barrels/day in average production

IMPORTANT EVENTS

• Allocation of reserves and development

planning of Zarat field in progress

• Production well on the satellite field

Didon North failed

• No commercial discoveries found on

Jelma

• Disposal of two small producing fields

- El Bibane and Ezzaouia

• Political situation resulting in social

instability affecting activities in the

country

Highlights 2011: North Africa

16


SEK 3,848 million in non-current assets

3,300 barrels/day in average production

48

91

48

0

20

40

60

80

100



North Africa: Reserves and resources (mmboe)

IMPORTANT EVENTS

• Discovery of gas and condensate on

Broder Tuck in Danish licence 12/06

• Oil discovery in the Miocene structure on

Lille John in Danish licence 12/06

• Seismic analysis completed in Greenland

resulting in a number of sizable prospects

and leads

• Awarded new licence in Germany,

adjacent to Danish 12/06

Highlights 2011: North Sea and Greenland

17


SEK 758 million in non-current assets

34

299

0

50

100

150

200

250

300

350



North Sea and Greenland: Reserves and resources (mmboe)

Successful drilling campaign on 12/06 in Denmark PA Resources 64% (Operator)

18

Background

• 12/06 licence located in the Danish

part of North Sea

• Adjacent to existing oil and gas

infrastructure

• Exploration well drilled in 1975

(Broder Tuck field today),

encountered a gas column

• Awarded adjacent German licence in

January 2011, before successful

drilling

Denmark 12/06: Thorough geoscience analysis PA Resources 64% (Operator)

19

Pre-drill perceptions

• 1975 well with small gas column in Middle

Jurassic

• Industry perception of Chalk as only target in

area, with high risk on oil charge

Our perceptions

• Structures drilled historically on 2D data – 3D

acquired in past but no subsequent exploration

drilling

• Lies in Danish Central Graben – large fields

nearby

What we did

• Use of 3D to define Lille John as multi-target

prospect (Miocene, Chalk, Middle Jurassic)

• Evaluated historic well and recognised upside

Denmark 12/06: Discoveries and way forward PA Resources 64% (Operator)

20

Licence Group: Operator PA Resources (64%),

Danish North Sea Fund (20%),

Spyker Energy (8%), Danoil (8%)

Lille John-1

Broder Tuck - 2

B20008-73

12/06

Broder Tuck

• 360m+ gas and condensate column proved by wells

• High quality Middle Jurassic reservoir

• Mid to high case assessment of c. 25-50 mmboe

gross of contingent resources including liquids

• 2012 work programme to progress development

planning towards commercialisation

Lille John

• Wells established 35 API oil in Miocene sandstone

at c. 900m – exceptionally light oil for shallow depth

• Obvious seismic anomaly at Miocene

• Recognition of shallow light oil re-focussed work

on developing a Miocene prospect inventory

• Likely to be remaining deeper potential – Chalk

remains and well result upgrades Middle Jurassic

• 2012 work programme to reprocess 3D to determine

prospect inventory and appraisal well location,

drilling project management tendered

PA Resources’ operator with focus on HSE

21

Objective - safe drilling campaign with minimal impact

• Total working hours; 184,149 or 7,673 man days with an average

of 72 personnel on board during operation

• Reportable incidents; 0 environmental incidents, 3 reportable incidents,

0 lost time incidents, 1 first aid case

• HSE audits; > 100 audits by PA Resources’ rig-based HSE supervisor

• Transportations; 6,698 tonnes of equipment moved to/from rig in

68 supply boat sailings

• Use of chemicals; 238.8 tonnes of chemicals discharged being 96.3%

designated Green substances which pose little or no risk to environment

• Use of environmentally harmful substances; usage of only 15.6

tonnes of 221 tonnes in total that PA Resources was permitted to use, of

which, zero tonnes discharged to the environment

• Disposal; 76.9 tonnes of waste shipped from the rig for safe disposal

22

Success factors and the 12/06 team

Key success factors

• Careful, diligent work and formed own

evidence-based views on prospectivity

• Conducted a safe drilling campaign with

minimal impact to highest standards

• High degree transparency to joint venture

partners and DEA

• Professional team and good communication

PA Resources UK – the 12/06 team

Fiona Goodfellow

Geoscience Project Leader

Dave Mackertich

Senior Geoscientist

Mark Attree

Exploration Manager

Jon Lucas

Geotechn. & HSE Manager Graham Goffey

Regional Director

William Tyrell

Geologist

Reserves and valuation

Q1

2011 Reserves and resources

24

2P Reserves

• Aseng derisked – 6 months in

production

• Alen production start in 2013

Contingent Resources

• Danish discoveries on 12/06 added

32 mmboe

Risked Prospective Resources

• Seismic analys of Greenland licence

added significant volumes

• Danish 12/06 exploration potential

60.2

145

409

72.5

141

297

0

50

100

150

200

250

300

350

400

450



2011

2010

Overview: Assets per classification

25

● Azurite

● Didon

● Tunisia onshore

● Zarat liquids

● Block I:

● Aseng

● Alen

● Didon

● Zarat gas

● Elyssa

● Zarat permit

● Didon North

● Denmark 12/06

● Block I (other)

● Mer Profonde Sud

● Marine XIV

● Netherlands

● Tunisia: Jelma, Makthar,

Jenein Centre, Zarat permit

● UK

● Mer Profonde Sud

(Miocene & Sendji)

● Marine XIV

● Block I and Block H

● Netherlands: Schagen, Q7

● Denmark: 12/06, Gita/Maja

● Greenland, Block 8

60.2 mmboe 145 mmboe

409 mmboe

2P Reserves Contingent Resources

Risked

Prospective Resources

Producing assets Under development Priority development

Current valuation of 2P reserves

26

Peer group

2012*

PAR

AGM 2012

PAR

AGM 2011

Market capitalisation 920 2,665

Net debt 3,400 3,280

Enterprise value SEK million 4,320 5,945

Enterprise value USD million 1,124 640 950

2P boe million 77 60.2 72.5

Value/2P boe (USD) 14.60 10.60 13.10

PAR oil price (USD) 120 103

* Peer group includes 15 E&P companies per April 2012

Indicative valuation of selected assets

27

Producing: 17.2 18 - 28 310 - 482

North Africa:

• Tunisia

West Africa:

• Congo (Azurite)

• EG (Aseng)

To be developed: 43.0 37.8 4.5 – 8.5 364 - 686

• Tunisia: Zarat field

• EG: Block I

• Denmark: Broder Tuck

Total 674 – 1,168

Net debt -500

(Market) value 174 - 668

SEK/share *equivalent 1.85 – 7.00

60.2 mmboe

145 mmboe

2P Reserves

Contingent

Resources Value range

(USD/boe)

Indicative value

(MUSD)

* USD/SEK 6.75

Strategic focus update

28

Develop

prioritised

assets

Increase

reserves and

resources

Strengthen

capital

structure

Increase value from

existing assets

• Azurite and Aseng completed

• Alen production start in 2013

Development of prioritised assets in Africa

Selective exploration activities

• Discoveries on 12/06 in Denmark

Strengthen captital structure

• Refinancing activities in 2011

• Net debt reduced by SEK 600

million in Jan. – April 2012

• Low capex – positive cash flow

in 2012

29

Outlook and focus 2012

• Technical and economic analysis of

remedial options for Azurite well

• Appraisal drilling and development

planning of Danish discoveries towards

commercialisation

• Selective appraisal and exploration

activity in EG: Block I and Block H

• Progressing the Zarat field and Block I

development projects

• Positive cash flow and reduction of debt

Thank you! Q1

Investor Relations

PA Resources AGM 22 May 2012