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

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Dana Gas Credit Investors Presentation February 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  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%

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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 60-70% of Middle Eastern gas 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: ca. 6960 million Market capitalisation: approx. $ 890 million Enterprise value: $ 1.435 billion  Net Debt/(Cash)1: $ 545 million (4Q 2014)  Current Production: 68.9 kboepd (2014 YE)  2P Reserves2 : 150 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 ( Sukuk less cash less MOL shares) 2.Includes Egypt & UAE reserves only at end of 2013

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

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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 2013) 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 13%

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30 33 24 43 138 165 156 125

20 40 60 80 100 120 140 160 180 2007 2008 2009 2010 2011 2012 2013 2014 USD Million

282 311 349 487 690 636 652 683

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

Consistent growth, delivery and financial performance since 2007

Revenue Profit After Tax

11 CAGR: 14% CAGR : 23%

Production

CAGR :13%

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Dana Gas: Country Business Highlights

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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 2013, IMF, Morgan Stanley

Despite a challenging business environment; Egypt gas fundamentals are robust. Dana Gas continuous 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

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200 400 600 800 1,000

2014 WI Production, mmcfpd

100 200 300 400 500 600 700

Gas Reserves, bcf

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

Source: Wood Mackenzie

Gas Reserve Ranking of Independents in Egypt 2014 Gas Production Ranking in Egypt (* denotes company is an operator)

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Dana Gas Egypt Credentials: 9th 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

Development Leases: Onshore acreage consisting of 13 Development Leases in the prolific Nile Delta region. One additional DL (Begonia) is expected to be approved before end

• f Q1/2015.

Production: Q4 2014 avg. 37.9 kboepd is lower than Q3 production nevertheless full year production of 40.4 kboepd is above the 2013 average of 37,100 boepd. Commercial: Ancillary agreements to the Gas Production Enhancement Agreement (GPEA) are expected to be approved this month

* Excluding EBGDCO share of Production

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

GPEA – Project Execution underway

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Investment highlights:

• Drilling includes 37 new wells and an equivalent

number of work-over wells over a 7 year period in existing concessions in Nile Delta

• Investment to boost incremental production by c.

270 bcf of natural gas, 9 mmboe of condensate and 450k tonnes of LPG

• Capital

expenditure to be funded by a combination of project financing and internally generated funds from Egypt Commercial framework

• Financial proceeds from incremental condensate

sales at international market prices are to be retained by Dana Gas and the government share

• f proceeds will be applied directly to pay down
• utstanding receivables
• Under the agreed

commercial arrangement, Dana Gas’ receivables are expected to fall from the current level to nominal levels by mid-2018

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Block 6 – North El Arish Offshore Opportunity

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 G&G studies prior to commencing seismic acquisition in Q4-14 / Q2-15  Environmental Impact Assessment ahead of seismic

• perations

 Seismic reprocessing of vintage 2D seismic data across the block Q4-14  The initial seismic acquisition will consist of ~2000 LKM of 2D seismic to cover the deep water portion of the block where there is currently very limited seismic coverage

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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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 Awarded the North El Salhiya (Block 1) and El Matariya (Block 3) onshore concessions in the Nile Delta in 2014 EGAS bidding round  Block 1 (100% WI) is an extension of the company’s successful conventional business  Block 3 (50% WI), BP as the operator as 50:50 partner. Opportunity to target deeper, high-potential Oligocene play which is proven and tested in offshore Nile Delta by BP & BG  BP and Dana Gas in discussions on possible joint participation in some of Dana Gas’s adjacent Development Leases linked to exploration success in Block 3 Blocks 1 & 3 located adjacent to Dana Gas’ prolific Nile Delta development leases

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Operations in Kurdistan Region of Iraq

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 DG share of production (40%) averaged 28,400 boepd during 4Q 2014:

• 119 MMscfd of natural gas
• 5,346 bbl/d of condensate
• 275 MT/d of LPG

 The Mol sieve beds for both Kor Mor plant trains have been replaced.  Production of LPG increased from 514 MT/D in 3Q 2014 to 688 MT/D in 4Q 2014; which represents an increase of 34%  All liquids continue to be sold in the domestic market.

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5 10 15 20 25 30 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 potentially largest gas fields in the KRI and comparable to large scale gas developments in the region

Large Gas Developments in MENA (Source: Company disclosure)

* Excludes associated liquid and oil upsides

Kurdistan Gas Fields Key MENA gas fields under development

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30 60

KhorMor + Chemchemal Miran Bina Bawi Khazzan (Tight Gas) Oman Leviathan + Tamar (Isreal) Al Hosn (sour gas) UAE

Gas in Place * (in TCF)

(Israel)

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UAE: Zora Project Update

 Overall project progress is in line with plans for first gas in 1H 2015 with a capacity of 40 mmscfd (6,650 boepd)  Offshore Pipeline 90% complete  Offshore platform jacket complete and installation is planned for February 2015.  Topsides Construction Progress is 64%  Onshore plant 60% complete.  Drilling planned to start April 2015.

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Dana Gas: Credit Metrics

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Additional financial information

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*LTM as of Q3 2014 results

EBITDA (LTM) $mln 413.2 EBIT (LTM) $mln 293.6 Net Debt $ mln 581.1 Net Debt/EBITDA x 1.4 Interest Cover Ratio (LTM) x 4.0 Book Leverage (Net debt/Total assets) x 16% Weighted Avg Years to Maturity Years 2.7 Dana Gas Additional Financial Metrics

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Dana Gas Sukuk instruments

Convertible Sukuk:  Principal amount: $404 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

Sukuk Yield to Maturity 25

• 0.2

0.4 0.6 0.8 1.0 1.2 80 85 90 95 100 105 110 115 120

Dana Gas Share Price, AED Dana Gas Convertible Trading Value

Convertible Price Share Price 3 6 9 12 15

Convertible Mid Yield to Maturity

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• 60
• 45
• 30
• 15

15 30 Genel Dana Gas Premier Oil Petroceltic Afren DNO Tullow Lundin

EBIT/Interest Expense

• 25
• 20
• 15
• 10
• 5

5 Lundin Premier Afren Dana Gas Petroceltic DNO Genel Tullow

Net Debt / EBITDA

Leverage and interest coverage ratio in line with peers

Net Debt /EBITDA (LTM*)

(Source: Bloomberg)

EBIT / Interest Expense (LTM*)

(Source: Bloomberg)

*LTM as of Q3 2014 results (Dana Gas, Afren). LTM as of H1 2014 results (Petroceltic, Genel, Premier). LTM as of 2014YE results (DNO, Lundin, Tullow)

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

Debt/Common Equity

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

Debt/Total Assets

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

Reserve Life, Years

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

Werighted Avg Years to Maturity

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

Note: Dana Gas Reserve life exclude KRI production & reserves

Reserve Life (2013 YE*)

(Source: Company Data)

Debt : Average year to maturity

(Source: Bloomberg)

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*2014YE for Lundin and Tullow – for Afren this uses 2013YE figures adapted for January 2015 KRI reserve downgrade

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Summary

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Summary

30  It has been a difficult operating environment for all of the reasons that have been identified and yet Dana Gas has continued to deliver excellent operating and financial results

• This speaks to the quality of our assets, both geological, physical and our staff

 Production has significantly increased (6%) as have revenues despite the significant downturn in oil prices in the second half of 2014  In Egypt, collections were the highest since our operations began in 2007. In the KRI local sales restarted a revenue stream to cover both local costs and to contribute towards corporate commitments. However, despite the collections in Egypt and the KRI overall receivables increased to $ 979 million  The GPEA in Egypt has put in place a mechanism that allows the Company to recover its receivables gradually through time and to extract the maximum value out of the assets for our shareholders  Dana Gas and its Consortium partners continue to pursue multi-billion dollar claims in the arbitration against the KRG for breach of contractual commitments, which will be determined in a merits hearing that has been ordered by the Tribunal to take place the week of 20th April 2015.  The Company has put considerable effort into its successful attempts to access opportunities with material growth potential and now has assets, which, in case of success, would be transformational for the Company  A strong operational performance, our improving collections position and focus on lowering costs (Opex and G&A reduced by 17% and 12.5% respectively) on a year-on-year basis has resulted in a stronger balance sheet  Altogether we are proud of the achievements we have made in 2014 and the contribution we have made to enhancing shareholder value and the quality of life of the communities in which we operate  Dana Gas is now in a strong position to make significant strides in becoming the largest independent regional E&P company and to generate long-term value for its shareholders

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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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