The New generation NCS operator - January 2020 - OKEA

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The New generation NCS operator - January 2020 - OKEA
The New generation NCS operator
January 2020
The New generation NCS operator - January 2020 - OKEA
OKEA – an independent E&P company on the NCS
                                                                                                                                           Production
                                                                                                                                                                                            HQ
                                                                                                                                          Development                                   (Trondheim)

                                                                                                                                                                       Draugen
                                                                                                                                                                   (44.56% WI, op.)

                                                                                                   19,200 boepd
                                                                                                                                                          Gjøa                         Operations
                        NCS ONLY                                                                      PRODUCTION1                                       (12% WI)                      (Kristiansund)

                                                                                                                                           Ivar Aasen
                                                                                                                                          (0.554% WI)

              USD 11.1/boe                                                                             88 mmboe                                         Grevling / Storskrymten
                                                                                                               2P+2C                                      (35% / 60% WI, op.)
                          OPEX1
                                                                                                                                                               Yme
                                                                                                                                                             (15% WI)

    (1) 2019 year to date (Q1-Q3), offtake cost and insurance not included. Converted at the official Norges Bank USD-NOK exchange rate
                                                                                                                                                                                                       2
The New generation NCS operator - January 2020 - OKEA
5 licenses awarded in APA 2019 – strengthen OKEAs position in
core areas
             Draugen/Mistral area                  Grevling Area

  PL1003 B

                                                                               Licence    Block(s)      Operator         OKEA
                                                                                                                         share
                                                                               PL1060     6407/8,9   Equinor Energy AS    40%

                                                                               PL1034      15/12     Chrysaor Norge AS    40%

                                                                               PL093 F     6407/9       OKEA ASA         44.56%

                                PL1060
                                                                               PL1003 B   6406/3,6      OKEA ASA          60%

                                                                     PL973 B
                                                                               PL973 B     15/12     Chrysaor Norge AS    30%

                                                            PL1034

                                         PL093 F

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The New generation NCS operator - January 2020 - OKEA
OKEA is a responsible and value focused E&P company

Safe and responsible   Continuously improving   Value driven M&A   Financial flexibility and
     operations              operations                                  robustness

                                                                         $
 A NCS focused E&P       Improvement and          Target value        Prudent financial
     company               digitalization       enhancing growth          strategy

             “The OKEA way” is a safe and responsible approach to all we do

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The New generation NCS operator - January 2020 - OKEA
Safe and responsible operations

Proven operational capabilities
on Draugen

 • No incidents or leakages in 2019
 • Strong production in 2019, 5% above target
 • Average 90.8% reliability last 3 years, 94% in 2019
 • Unique knowledge of Draugen upside potential
 • Positive production outlook to 2040
 • Several maintain integrity projects executed
 • Operating cost reduced by more than 200 MNOK

        (1) Draugen 100%
                                                         5
The New generation NCS operator - January 2020 - OKEA
Improvement and digitalization

Improving Draugen operational
efficiency

 • Optimised decision processes have reduced lead
  time
 • Mapping of governing documents, removing
  redundancy
 • Software applications down by 33%
 • Using industry standards for development projects
 • Revised roles and responsibilities
 • Revitalising earlier stranded projects
 • New digital platform in cooperation with ABB and
  HP

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The New generation NCS operator - January 2020 - OKEA
Draugen drilling 2019

                        No major accidents
                        Fast and effective operation (finish the well in less
   Drilling               than 7 days)
 targets and            • Infill Ø drilled in 5.38 dry hole days
   results              • Skumnisse drilled in 7,17 days
                        Rate of penetration (ROP):
                        •   100 M/HR IN 12 ¼’’ SECTION:    200-300 M/HR
                        •   200 M/HR IN 8 ½’’ SECTION:     410 M/HR (peak)

                        Fit for purpose 2-strings well design
                        OKEA way with performance midset
  Success
  criteria              Involvment of OKEA key personell
                        Good rig in Deapsea Nordkapp
                        Excellent mud, cement and drilling tools

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The New generation NCS operator - January 2020 - OKEA
OKEA is committed to operate safely and responsibly
Safety                                                                              Environment

Safe and sustainable business with zero harm to people                                   Energy efficient production with focus on reducing
                                                                                                       environmental footprint
                      or assets
•   Serious incident frequency (SIF) for Draugen on “0” for 2019 (as for 2018 and
    2017)                                                                            Draugen – Targeting lower emissions
                                                                                     Despite the “nature” working against late life producers – OKEA aim to
                                                                                     improve
                                                                                     ‒ Liquid fuel will be replaced with gas in 2020
                                                                                     ‒ Environmental strategy & management plan implemented
                                                                                     ‒ New environmental projects initiated in 2019
                                                                                     ‒ Lifetime extension
                                                                                     ‒ Draugen as area hub

                                                                                    Gjøa – Industry leading low emission asset
                                                                                     ‒ Gas supplier to UK – substituting coal
                                                                                     ‒ Electrified with power from shore, reducing direct emissions

                                                                                    Ivar Aasen – Power from shore sanctioned
                                                                                     ‒ Sanctioned investment to electrify in 2022 with renewable power from shore

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The New generation NCS operator - January 2020 - OKEA
Value driven M&A
Target the right deals

• Target value enhancing M&A on NCS
• Emphasising portfolio fit to enable synergies
• The right deals more important than timing
• Desire operatorships
 ‒ producing assets and developments up to 100 mmboe
• Funding through operating cash flow and owner
 support
• Proven industry leading onboarding process of
 new assets

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The New generation NCS operator - January 2020 - OKEA
Financial flexibility and robustness

 Strong financial performance
  Production (kboepd)                                                                                        EBITDA1 (NOKm)                                                                                     Cash position2 (NOKm)
   Q3 2019                                                                                                     Q3 2019                                                                                           Q3 2019
   Previous                                                                                                    Previous                                                                                          Previous
                                                                                                                                                                                  2

                                                                                                                         # of Draugen
                                                                                                                            liftings

                                                                                                                                                              1                                         1

                                                                                                                                                                                                                                                          1 799
                                                                                                                                                                                 594
               22,4
                                     19,5                  20,0
                                                                                 18,1                                                                                                                                                           1 329
                                                                                                                                                            413                                       404

                                                                                                                                                                                                                                       586
                                                                                                                                       133                                                                                   395

   0.4                                                                                                             42                                                                                              57

 Q3 2018      Q4 2018             Q1 2019               Q2 2019               Q3 2019                         Q3 2018              Q4 2018              Q1 2019              Q2 2019               Q3 2019      Q3 2018     Q4 2018   Q1 2019   Q2 2019   Q3 2019

120MUSD bond issue in Q4 2019 gives financial flexibility going forward

              (1) APM: EBITDA is defined as earnings before interest, taxes, depreciation, depletion, amortisation and impairments. Net debt is defined as interest bearing debt less cash & cash equivalents

                                                                                                                                                                                                                                                                  10
              (2) Excluding restricted cash
Outlook

High level of activity in coming years
                                 Q4’19                                       Q1’20                                        Q2’20                                Q3’20                         Q4’20                           Q1’21                         Q2’21

                                                                                                                                             Target further debottlenecking and cost reductions

   Draugen                                                                                                                                                                                                                                             Appraisal well

                                                                            BOK/BOV1
                                                                            Hasselmus                                                        Hasselmus FID

                                                                        Progressing redevelopment of Gjøa P1 towards first oil late 2020                                                          Gjøa P1 production start
     Gjøa

                                         Progress and de-risk Yme towards first oil mid 2020                                                   1st oil Yme
     Yme

                                                                                                                                                                 IOR well programme – two wells per year 2020-21

   Ivar Aasen

                                                                                                                                     Progress Utsira High Area power grid project – Power from shore from 2022

                                                                                                                         Gjøa Hamlet prospect planned well in 2020
 E&A and other
   prospects
                                                                                                                       BOK/BOV1
                                                                                                                 Grevling/Storskrymten                                                                     Mistral North appraisal and PL973 exploration drilling

                                                                                                                   Pursue further M&A – both bolt-on acquisitions and larger transformational deals
   Business
  development                                                                  APA 2019                                                                            APA 2020                                                      APA 2020
                                                                                awards                                                                            applications                                                    awards

            Note: Indicative timeline. Milestones may be subject to approval by the Ministry of Petroleum and Energy and licence decisions

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            (1) BOK = Concretisation decision, BOV = Decision to continue, BOG = Decision to implement
OKEA investment highlights
                        • NCS-focused E&P company with strong cash flow from ca. 20 000 boed in net production
 Safe and responsible   • A responsible operator focusing on safety and lowest possible environmental footprint
  operations on NCS
                        • Proven value creation in 2019 as operator of the Draugen field

                        • Improvement programme utilize innovative tools to increase operational efficiency
     Operational
   improvement &        • A step-wise approach to digitalization of operation on the operated Draugen field
    digtialization

                        • Actively targeting value enhancing growth through M&A, across production and
                          developments up to 100 million boe
  Value driven M&A
       growth           • Experienced operational organization suited for new operatorships and capturing synergies

                        • Financial flexibility through new bond issue (RBL can replace OKEA 03 if OKEA decides –
  Prudent financial       preapproved of bond holders)
      strategy

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okea.no

Ståle Myhre
   VP IR

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