Clean Energy For the MENA Regions Tomorrow Dana Gas Investors - - PowerPoint PPT Presentation

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Dana Gas Investors Presentation September 2015

Clean Energy For the MENA Region’s Tomorrow

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Forward Looking Statement

This presentation contains forward-looking statements which may be identified by their use of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or other words of similar meaning. All statements that address expectations or projections about the future, including, but not limited to, statements about the strategy for growth, product development, market position, expenditures, and financial results, are forward looking statements. Forward-looking statements are based on certain assumptions and expectations

• f

future events. The Company, its subsidiaries and its affiliates (the “Companies”) referred to in this presentation cannot guarantee that these assumptions and expectations are accurate or will be realised. The actual results, performance or achievements of the Companies, could thus differ materially from those projected in any such forward- looking statements. The Companies assume no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events, or otherwise. 2

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Presentation Outline

 Increasing role of gas in MENA  Dana Gas – Business Profile  Country Operations – Egypt, KRI and UAE  Valuation and Credit Metrics  Summary

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Qatar 5%

Nigeria 1% Other FSU 3% LatAm Left China,

• ther ME

13%

Algeria 2%

Iran 5%

Turkmen. 2%

Russia 18% OECD 36% Other 15%

Gas is the growth fuel of the 21st Century. It has strong environmental credentials, is cost competitive, is accessible and available in abundance

50 100 150 200 250 300

Solar PV (Germany) Solar PV (South USA) CCS Coal Offshore wind Biomass Inciner. Nuclear (EPR) Onshore wind (UK) New Hard coal New CCGT @ LEA price range Oil in Jul 2014 Oil in Dec 2014

Full Life Cycle Cost (USD / boe)

Current full lifecycle costs for new-build power generation including externalities (USD per boe)

• c. 10%

utilisation of capacity

• c. 35%

utilisation

• f capacity

? Not yet working at scale Subject to supply price uncertainty ? No full cycle cost audit

?

• c. 25%

utilisation

• f

capacity

Fall in oil price has brought its price below renewables and more into line with gas prices

• c. 20%

utilisation

• f

capacity

Latin America 8% North America 16% Middle East + Africa 27% Former Soviet Union 26% Europe 5% Asia Pacific 18%

Huge global conventional and unconventional gas resources

250+ years of gas resources at 2012 global demand levels

• c. 825

tcm

% of 2013 gas production

Openness of gas industry

0.0 0.2 0.4 0.6 0.8 1.0 1.2 Nuclear Biomass Offshore Wind Coal CCS Gas Coal Carbon Intensity (tCO2 per MWh)

CO2 emissions of various fuels in power generation

Save 60% today at low cost…

Gas / Coal CCS

… or save extra 30% in uncertain future at very high cost

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500 1,000 1,500 2,000 2,500 3,000 3,500 1990 1995 2000 2005 2010 2015 2019

GDP, USD bn

50% 49% 50%

• 200

400 600 800 1 000 1 200 1 400 1 600 1990 2012 2020 2030 2040

Primary Energy Demand, bcme pa

Gas Other

34% 53% Source: IEA, IMF, BP Statistical Review 2014

0% 50% 100% 150% 200% 250% 300% 350% 400% 450% 500% China Middle East India Japan US EU

Total Gas Demand Growth since 2003

• 1. Middle East comprises: Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, UAE, Yemen

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Middle East gas demand is poised for continued growth as the region’s population and economy grows in coming decades

CAGR: 8.2%

GDP Growth of Middle East1 Primary Energy Demand of Middle East1 Regional Gas Demand Growth in Last Decade

428 2013 Gas Demand (bcm pa) 162 51 117 737 438 Gas CAGR: 4.5% Gas is 50% of regions Energy Mix in 2013

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Reserves, bln boe

Gas Oil

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Oil Gas MENA RoW

54% 49% 46% 51%

Open access (incl. licensing round) Partially open Restricted access (no open/direct access for independent oil companies) or geopolitical concerns

1688 bln bbl 6558 Tcf

MENA Reserve Ranking

Recent political developments may lead to improved access in future

Oil & Gas Proved Reserves (Source: BP Statistical Review 2014)

• 1. KRI reserves as estimated by Ministry of Natural Resources of KRG: Oil at 45bln bbls & Gas at 100tcf

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MENA region holds ca. 50% of global oil & gas reserves but with limited access. Dana Gas has established presence in both large resource plays and growth market with open access

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20 40 60 80 100 120 140 160 180 Iran Saudi Arabia United Arab Emirates Egypt Qatar Kuwait Bahrain Oman Yemen Syria Iraq (Incl. KRI)

2013 Gas Demand, bcm pa

5 10 15 20 25 30 35 40 Iran Qatar Iraq (Incl. KRI) Saudi Arabia United Arab Emirates Egypt Kuwait Oman Yemen Syria

Proved Gas Reserves, tcm

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• Incl. KRI

resource estimates

Gas Resource Holders in Middle East (incl. Egypt) (Total Reserves: c. 82 Tcm) 2013 Gas Demand in Middle East (incl. Egypt) (Total Demand: c. 473 bcm pa)

Source: BP Statistical Review 2014, EIA

Dana gas as regional gas integrated player focused on matching resource with markets

Access to Private Capital

Closed/inaccessible Potentially Open Open

Based on IHS estimates

• approx. 60% of ME

resources are associated gas

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Dana Gas – Business Profile

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Dana Gas: Independent E&P company listed on the ADX

 Dana Gas is a MENASA focused gas independent headquartered in the UAE  Dana Gas is quoted in the Abu Dhabi Securities Exchange. Bloomberg: DANA:UH  Shares outstanding: c. 6961 million Market capitalisation: approx. $ 950 million Enterprise value: $ 1.60 billion Average Daily Traded Volume: 15% of ADX  Net Debt/(Cash)1: $ 595 million (2015 H1)  Current Production: 67,200 boepd (2015 H1)  2P Reserves2 : 145 mmboe  Strong Corporate Governance structure and a unique pan-MENA Board of Directors access to business opportunities in the world’s largest hydrocarbon region

1.Total interest bearing debt less cash ( Borrowing less cash less MOL shares) 2.Includes Egypt & UAE reserves only at end of 2014

Dana Gas is operating at the heart of the World’s Largest Hydrocarbon region

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20 40 60 80 100 120 Egypt UAE 2P reserves (mmboe)

Business Model across the gas value chain – Meeting energy needs of domestic and export markets Dana Gas is operating at the heart of the world’s largest hydrocarbon bearing region Reserve & Resources (YE 2014) Mid Stream and Downstream assets in MENA Production Profile

 EBGDCo – Liquid Extraction plant (LPG)  UGTC & SajGas - Gas Transportation and Processing  35% in Crescent Natural Gas Corporation Limited (CNGCL) – Gas marketing

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Dana Gas works across the gas value chain addressing both domestic and export market needs in MENA region

CAGR 11%

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Consistent growth, delivery and financial performance since 2007

Revenue Profit After Tax

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Production

282 311 349 487 690 636 652 683 231

100 200 300 400 500 600 700 800 2007 2008 2009 2010 2011 2012 2013 2014 H1 2015 USD Million

EBITDAX

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Dana Gas: Country Business Highlights

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50 100 150 200 250 300 350 400 450

GDP, US$ Current Prices

10 20 30 40 50 60 70 80 90 100

Primary Energy Demand (mln toe pa)

Other Renewables Coal Hydro electric Oil Natural Gas

Source: BP Statistical Review 2014, IMF, Morgan Stanley

Despite a challenging business environment; Egypt gas fundamentals are robust. Dana Gas to play a key role in increasing gas production in the core Nile Delta region

13 Egypt GDP (USD bln) Egypt Primary Energy Demand (mln toe pa) Gas consumption in Egypt in 2015 expected to exceed production (LNG imports expected to fill the gap) Onshore Nile Delta steady and critical gas supply source

20 40 60 80 100 120 140 10 20 30 40 50 60 70 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015E Population, mln Gas, bcm pa Population (RHS) Production Consumption

EGPC official (April 2015): “Egypt will import around $3.55 billion worth of liquefied natural gas (LNG) in the 2015-2016 financial year”

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100 200 300 400 500 600 700

Gas Reserves, bcf

100 200 300 400 500 600 700 800 900 1,000

2015 WI Production, mmcfpd

Dana Gas is the 6th largest operator and 4th largest onshore producer in Egypt

Source: Wood Mackenzie

Gas Reserve Ranking of Independents in Egypt 2015e Gas Production Ranking in Egypt (* denotes company is an operator)

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Dana Gas Egypt Credentials: 8th largest producer 6th largest operator 4th largest onshore producer

EBGDCO LPG Plant

(Dana Gas holds 26.4% of the project)

1.Edison holds 100% operating interest in Abu Qir, but the development is operated by a 50:50 JV with EGPC – Edison not designated as operator

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Egypt: Nile Delta Operations

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El Wastani South El Manzala

Begonia DL * Excluding EBGDCO share of Production

Development Leases:

• Onshore acreage consisting of 14

Development Leases in the prolific Nile Delta region. Begonia, the most recently awarded lease, was approved in Jan-15

Production:

• 2Q 2015 average of 35.01 kboe/d

currently on a decline due to natural field decline. Trend to be reversed once tie-ins involving the laying of pipelines & well hook-ups associated with GPEA project are completed

Operations:

• Drilling of Balsam-2 and Balsam-3 wells

are in progress with results due in 4Q 15

• Pilot hole completed on Balsam-2. On-

prognosis results: 78 m of net pay in excellent quality reservoir in the primary Qawasim (QP2) objective; and 10.5 m net pay in the secondary QP1 objective

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Gas Production Enhancement Agreement (GPEA) helps Egypt increase production while delivering long term value to Dana Gas

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Gas Enhancement Project – Execution Progress

• 3 drilling and workover rigs

secured with spud dates during May/June  650 HP workover – 14 activities planned, expected start date Sept / Oct 2015  2000 HP rig - Balsam-2  1500 HP rig - Balsam-3

• 130 km pipeline to tie new

wells into DGE infrastructure

• Upgrade to DGE processing

and export capacity from 200 to 250 MMscf/d to accommodate increased production from GPEA project in 2016.

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Block 6 – North El Arish Offshore Opportunity

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Block 6

DGE

• Integration of regional 2D

multi- client seismic data into evaluation

• Environmental Impact

Assessment completed

• Military approval in progress
• ~1750 sqkm of 3D seismic

acquisition planned before end 2015, located over the deep-water portion of the block

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Newly awarded exploration blocks in Nile Delta enables Dana Gas to build on its core area production and utilising existing infrastructure

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Blocks 1 & 3 located adjacent to Dana Gas’ prolific Nile Delta development leases

• North El Salhiya (Block-1) and El

Matariya (Block-3) onshore concessions ratified in January 2015

• Block-1 (100% WI) –
• Targets prolific Abu Madi play
• Bids for 450-1000 sqkm of 3D

seismic received and under evaluation.

• Block-3 (50% WI) BP to operate as

50:50 JV partner

• Targeting the deeper, high-potential

Oligocene play (proven and tested in

• ffshore Nile Delta by BP and BG)
• First exploration well in Block 3

scheduled to commence drilling in 1H 2016

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Operations in Kurdistan Region of Iraq

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• Gross production averaged 75,540

boepd during 1H 2015 including:

• Gas: 317 MMSCFD
• Condensates: 14062 boepd
• LPG: 737 MTD
• Dana Gas has a 40% WI
• Dana gas saw a 6% increase over 1H

2014 as a result of increased LPG production.

• All liquids continue to be sold in the

domestic market since September 2014, resulting in cash flow

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5 10 15 20 25 30 35 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 2011 2012 2013 2014 H1 15 Production (kboed) Gas Liquids(Condensate + LPG)

Rich gas and condensate producer with strong growth track record

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Khor Mor Field Production, Dana Gas net share (40%)

• 3. Current Condensate Gas Ratio (CGR) on Khor Mor is c. 45 bbl/mmscf comparable to Qatar North Field CGR of 47~50

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Khor Mor and Chemchemal are world class assets: potentially largest gas fields in the KRI and comparable to some of the largest gas field developments in the region

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under development

(Isreal)

Some Large Gas Developments in MENA

60 30

KhorMor + Chemchemal

Miran

Bina Bawi

Arabiyah

• Hisbah

(KSA) Leviathan + Tamar (E. Med) Al Hosn (UAE sour)

Gas in Place (in TCF)

*

Bab (UAE sour)

KRI gas fields Key MENA gas fields under development

* Excludes associated liquid and oil upsides

Source: Company / public disclosure

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UAE: Zora Project Update

 Project plan for first gas in 2015 with a capacity of 40 mmscfd (6,650 boepd)  Offshore Pipeline pre- commissioning complete  Offshore Platform jacket installed  Drilling complete and Well stimulation ongoing  Topsides pre-commissioned  Onshore plant pre-commissioning

• ngoing

 Project safety performance: Zero lost time incident

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UAE: Zora Project Update

Offshore Trenching for the Zora Gas Pipeline

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UAE: Zora Project Update

Onshore Gas Plant Construction Slug Catcher Being Positioned

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Dana Gas: Relative Valuations

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EV and Production valuation relative to peers

Source: Company Data, Bloomberg

Enterprise Value vs. Production (2015E)

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10 20 30 40 50 60 70 80 90 100 1 2 3 4 5 6 7 8 9 10 WI Production (kboepd) Enterprise Value ($ bn) EV ($bn) 2015E Production (kboepd)

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9.2 1.2 0.6 0.4 0.3 0.3

0.0 2.0 4.0 6.0 8.0 10.0 Lundin DNO Tullow Premier Genel Dana Gas Price/BPS (2016E)

3.5 3.4 2.6 2.2 2.1 1.0

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Tullow Lundin Premier Genel Dana Gas DNO Price/CPS (2016E)

5.3 5.1 3.6 3.5 3.4 1.2

0.0 1.0 2.0 3.0 4.0 5.0 6.0 Tullow Lundin Premier Genel Dana Gas DNO EV/EBITDA (2016E)

17.4 11.1 10.7 8.0 7.2 4.4

5 10 15 20 Lundin Tullow Genel Premier Dana Gas DNO Price/EPS (2016E)

Significantly undervalued relative to peers

Source: Bloomberg Consensus as of 24/08/2015

P/CF 27 P/E EV/EBITDA

Mean * ~9.8 Mean* ~3.7

* European Peers mean ratio

P/B

Mean* ~2.0 Mean* ~2.5

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Dana Gas has mostly outperformed International and Middle Eastern (ME) peers since Jan 2013

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Source: Bloomberg, market data as of 24/08/2015

International Peers ME Peers

(100%) (50%)

• 50%

100% 150% 200% Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15

Relative performance (%)

Dana Gas -2% DNO International -48% Genel Energy -65% Petroceltic -75% Gulf Keystone -88%

(100%) (50%)

• 50%

100% 150% Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15

Relative performance (%)

Dana Gas -2% Lundin Petroleum -47% Premier Oil -74% Tullow -86%

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• 90%
• 80%
• 70%
• 60%
• 50%
• 40%
• 30%
• 20%
• 10%

0% 10% 20% DanaGas Africa Oil Cairn Energy Det Norske Lundin Petroleum Faroe Petroleum Cobalt Lekoil Green Dragon Soco Intl. Ithaca Kosmos Bowleven EnQuest Karoon Gas Brent Shamaran Indus gas TransGlobe Premier Oil Rockhopper DNO Tullow Oil Maurel & Prom Ophir Energy Genel Gulf Keystone Bankers Petroleum Vaalco Circle oil Seplat Kris Energy Inter oil Petroceltic Western Zagros Sterling Resources Oryx Petroleum Relative Performance

Strong performance even in the shorter term (since April 2015)

Source: Bloomberg, performance as of 24/08/2015

Relative market performance since Q2 2015 (1st April) 29

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Dana Gas: Credit Metrics

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Additional Financial Information

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*LTM as of 2H 2015

Dana Gas Additional Financial Metrics EBITDA (LTM) $mln 252 EBIT (LTM) $mln 149 Net Debt $ mln 595 Net Debt/EBITDA x 2.4 Interest Cover Ratio (LTM) x 2.2 Book Leverage (Net debt/Total assets) x 16% Weighted Avg Years to Maturity Years 2.2

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• 5.0

10.0 15.0 20.0

Convertible Mid Yield to Maturity

• 0.2

0.4 0.6 0.8 1.0 1.2 70 80 90 100 110 120 130

Dana Gas Share Price, AED Dana Gas Convertible Trading Value

Convertible Price Share Price

Dana Gas Sukuk Instruments

Convertible Sukuk:  Principal amount: $352 mln  Coupon: 7% (payable quarterly)  Maturity: 31/10/2017  Conversion price: 0.75 AED/sh  Conversion ratio: 48.9733 Ordinary Sukuk:  Principal amount: $425 mln  Coupon: 9% (payable quarterly)  Maturity: 31/10/2017

Convertible Sukuk Yield to Maturity 32 Convertible Bond Performance

Source: Bloomberg, market data as of 24/08/2015

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• 30
• 15

15 30 Dana Gas Premier DNO Genel Lundin Tullow Petroceltic

EBIT/Interest Expense

• 15
• 13
• 11
• 9
• 7
• 5
• 3
• 1

1 3 5 DNO Dana Gas Premier Petroceltic Genel Tullow Lundin

Net Debt / EBITDA

Leverage and interest coverage ratio in line with peers

Net Debt /EBITDA (LTM*)

(Source: Bloomberg)

EBIT / Interest Expense (LTM*)

(Source: Bloomberg)

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Market data as of 24/08/2015

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10 20 30 40 50 60 Lundin Premier Petroceltic Tullow Dana Gas DNO Genel

Debt/Total Assets

20 40 60 80 100 120 140 Lundin Premier Tullow Petroceltic DNO Dana Gas Genel

Debt/Common Equity

Book gearing and Leverage comparable to industry peers

Debt to Book value of Assets

(Source: Bloomberg)

Debt to Book value of Equity

(Source: Bloomberg)

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1 2 3 4 5 6 7 8 Tullow DNO Premier Genel Dana Gas

Werighted Avg Years to Maturity

5 10 15 20 25 30 35 40 45 Petroceltic Lundin Genel DNO Tullow Premier Dana Gas

Reserve Life, Years

Reserve life c. 2 x average year to maturity of Debt

Note: Dana Gas Reserve life excludes KRI production & reserves

Reserve Life (2014 YE*)

(Source: Company Data)

Debt : Average year to maturity

(Source: Bloomberg)

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Source: Bloomberg, market data as of 24/08/2015

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Summary

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Summary

 Marginal reduction in production resulting from natural field decline in Egypt despite the steep fall in oil prices  Further upside potential in 2015 with enhanced production following planned commencement of GPEA (Egypt) and Zora gas field (UAE)  10% production upside from Zora field development with first gas in 2H 2015  Ongoing focus on collections and further lowering of G&A and other operating costs  Capital expenditure remains focused on quick wins (Zora Project – UAE) and strategic growth (GPEA – Egypt)  Under the GPEA, drilling work on the Balsam-2 development well and Balsam-3 appraisal well in Egypt have commenced and the results from both wells are due in 4Q 2015  Operations in Kurdistan Region of Iraq (KRI) continue uninterrupted despite security situation with minor increases in production through process optimization  Kurdistan Arbitrations Update: The Tribunal delivered a partial ruling on the 30th June 2015 that confirmed Pearl consortium’s (DG 40% shareholder) exclusive, long-term rights to develop and produce gas and petroleum from both Khor Mor and Chemchamal fields for the duration of the contract, being not less than 25 years, as well as the KRG’s contractual obligation to pay the consortium for the produced condensate and LPG at international prices including the pricing methodology for each.

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Reach Us: Dana Gas PJSC

• P. O. Box 2011, Sharjah, UAE

www.danagas.com E-mail : rsingh@danagas.com Direct : +971 6 519 4401 Fax : +971 6 556 6522

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