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