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

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Dana Gas Investors Presentation March 2016

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  Gas – Growth fuel in MENA  Dana Gas – Overview  Country Operations – Egypt and KRI  Project Update – Zora Gas, UAE  Credit Metrics  Relative Valuations  Summary

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Assume: Europe coal US$62/tonne, NW Europe spot gas at price band of US$8-11/mln BTU, 80% load factor, €7.0/tCO2; uses IMF May 2015 estimates for coal and gas air pollution and GHG externality costs

Coal 44% Oil 36% Gas 20% CO2 emissions from fuel

(% share of global emissions)

Source: Bloomberg, IMF

Gas is the growth fuel of the 21st Century. Gas has strong environmental credentials and is cost competitive

Current full lifecycle costs for new-build power generation including externalities (US$/boe) Switching from coal to gas could reduce CO2 emissions by more than 12%... …and Air Pollution Rated Deaths by more than 50% according to the IMF 4

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50 100 150 200 250 300 350 400 Population (millions)

Bahrain Qatar Kuwait Oman Libya UAE Tunisia Yemen Saudi Arabia Iraq Algeria Egypt

MENA region has strong economic growth credentials. Energy requirements of the region are expected to increase.

Population growth in MENA countries GDP growth in MENA countries (US$ billions, current prices)

Source: UN Population Division, IMF

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Oil 41%

Gas 56%

Hydro 2% Other 1%

Oil 47%

Gas 51%

Coal 1% Hydro 1% Other 0%

100 200 300 400 500 600

Gas consumption (bcmpa) Other ME Kuwait Algeria Qatar Egypt UAE Saudi Arabia Iran

2000-14 MENA gas demand (bcm)*

Sources: BP Stats, IEA

Gas demand growth

(2000-2014 CAGR)

China – 14.5% MENA – 6.4% US – 1%

* Historical data for Tunisia and Libya unavailable

MENA gas demand is growing strongly. Dana Gas is well placed to be one of the region’s leading independent suppliers of this gas.

Middle East

16.6 mmboe/d

North Africa (Algeria + Egypt)

2.8 mmboe/d

Gas use as share of total primary energy demand Supply demand balance of MENA overtime

92 158 319 562

100 200 300 400 500 600 700 800 2004 2014 Gas balance, bcm pa Exported production Re‐exports Consumed Production

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20 40 60 80 100 120 140 160 180 Iran Saudi Arabia UAE Egypt Qatar Algeria Oman Kuwait Bahrain Tunisia Libya Iraq Yemen 2014 gas demand (bcmpa)

10 20 30 40 Iran Qatar Iraq Saudi Arabia UAE Algeria Egypt Kuwait Libya Oman Syria Yemen Bahrain Proved gas reserves, tcm

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Gas Resource* Holders in MENA (Total Reserves: c. 92 tcm) 2014 MENA gas demand by country. (Total Demand: c. 550 bcm pa)

Source: BP Statistical Review 2014, BMI

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

Access to Private Capital

Closed/inaccessible Potentially Open Open *60-70% of Middle Eastern gas resources are associated gas (IHS). ^ Iraq total includes KRI resource estimate

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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 MENA focused gas independent headquartered in the UAE  Quoted in the Abu Dhabi Securities Exchange. Bloomberg: DANA:UH  Shares outstanding: c. 6969 million Market capitalisation: c. $ 911 million (on 16/02/2016) Enterprise value1: $ 1.292 billion  Net Debt/(Cash)2: $ 379 million (2015 YE)  Current Production: 63.9 kboepd (2015 YE)  2P Reserves3: 686 mmboe (2015 YE)  Strong Corporate Governance and a unique pan- MENA Board of Directors access to business

• pportunities in the world’s largest hydrocarbon

region

• 1. Enterprise value includes $2mln of minority interests

2.Total interest bearing debt less cash

Dana Gas is operating at the heart of the world’s largest hydrocarbon region

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3.Includes Egypt & UAE reserves at end of 2015 and Khor Mor field reserves based on Pearl Petroleum’s estimate of 2P reserves based on production data

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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 Net reserves & resources (YE 2015) Midstream 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 10.3% *Includes 700bpd from EBGDCO (LPG plant) **In addition to the KM 2P reserves identified by Pearl Petroleum (PPCL) based on current production, PPCL also estimates total risked in place resource volumes (P50) of 75tcf of gas and 7bn bbl of oil in KM and Chemchemal fields Based on production data from 1 of 12 identified compartments in Khor Mor (KM) field

2P reserves (Gaffney Cline & Associates 2015, Pearl Petroleum)

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Consistent production growth, delivery and financial performance since 2007

Revenue Profit After Tax

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CAGR: 5%

Production

CAGR: 10.3%

*Includes 700bpd from EBGDCO (LPG plant)

CAGR: 21.6%

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Dana Gas: Country Business Highlights EGYPT

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10 20 30 40 50 60 70 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Gas Supply, bcm

Producing Sanctioned Projects LNG Exports LNG Imports Probable Projects Zohr Demand

Egypt gas market fundamental are sound. New gas discoveries and gas imports are likely to return Egypt’s domestic demand to its historic growth trajectory

Egypt annual gas supply/demand balance (post Zohr)

(Source: Woodmac)

Egypt’s current and planned regas capacity

(Source: company data, Interfax)

Forecast

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200 400 600 800 1,000 1,200 1,400 1,600 1,800

2016 WI Production, mmcfpd

Dana Gas Egypt Credentials: 8th largest producer 6th largest operator 5th largest onshore producer

Mainly onshore production Mainly offshore production

200 400 600 800

Gas resources, bcf

Dana Gas is the 6th largest operator and 5th largest onshore producer in Egypt

Gas Reserve Ranking of Independents in Egypt

(Source: Dana Gas, Woodmac)

2016e Gas Production Ranking in Egypt (Source: Woodmac)

(* denotes company is an operator)

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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

• 2. Dana Gas reserves based on 2015 year end reserve estimate

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Egypt: Nile Delta Operations

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* Excluding EBGDCO share of Production

Development Leases:

• Onshore acreage consisting of 14

Development Leases in the prolific Nile Delta region Production:

• 4Q 2015 avg 32.2 kboe/d versus 37.6

kboe/d for 4Q 2014. Decline in production followed a steady and predictable downward curve associated with normal field decline which was partially reversed when Balsam field production and well completions were brought on stream in 4Q 2015. Operations:

• Post Balsam-2 and Balsam-3

completions, SD-4, SF-5 and SAEN-7 wells were successfully completed in 4Q 2015.

• SF-5 has hit KES pay with 2 new

accumulations named Roaa and Anes. SAEN-7 proved a separate compartment with deeper gas water contact.

El Wastani

South El Manzala

Begonia DL

Balsam 3 Balsam 2

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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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• Longest gas column encountered in Dana

Gas Egypt portfolio.

• Pulse test between Balsam-1 and Balsam-2

indicated single compartment.

• Significant reserve add with higher than

expected condensate to gas ratio.

• Proven plus probable reserves in the Horst

structure certified by GCA have increased by more than 50%.

• Balsam-3 discovery well has proved up the

play in the western part of the development lease

• This is a separate hydrocarbon filled structure

from Balsam Horst increasing the resource base in this development lease with 2P estimated ultimate recovery of 73.4 bcf.

• Based on Balsam-3 results, further 2

exploration wells and 1 development well are planned within development lease in 2016.

Gas Enhancement Project – Execution Progress

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Block 6 – North El Arish Offshore Opportunity

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• Block-6 (100% WI)
• 1782 sq km of full fold 3D

seismic acquired in October 2015 by PGS Ramform Titan boat.

• 3D seismic processing

completed in January 2016.

• Initial processing results

indicates numerous play types with significant potential based on offset discoveries

• Farm-out activities have

started and interest has been shown by other players.

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Egypt: Block 1 - North El Salhiya Exploration 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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• Block-1 (100% WI)
• Targets prolific Abu Madi play
• Other plays include: Kafr El

Sheikh and Oligocene Activities

• Reprocessing of ~800 sq km of

3D seismic ongoing by Western Geco.

• Tender prepared for the

reprocessing of 2D seismic data.

• Plan to drill 4 exploration wells

in 2017.

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Egypt: Block 3 - El Matariya Exploration 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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• Block-3 (Dana Gas 50% WI)
• BP is operating Block-3 as

50/50 partner. The primary target is the deeper HPHT, and high-potential Oligocene play which has been proven in the

• ffshore Nile Delta with very

success rates and with high materiality (multi tcf).

• Expected spud date for Mocha-

1 exploration well is April 2016.

• Studies are underway for early

production from Mocha-1 well in the event of success.

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Dana Gas: Country Business Highlights Kurdistan Region of Iraq

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Operations in Kurdistan Region of Iraq

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 DG share of production averaged 28,800 boepd during 4Q 2015. Gross production details are as follows:  313 MMscfd of natural gas  13,703 bbl/d of condensates  830 MT/d LPG  The Mol sieve bed for the first train at Khor Mor plant was replaced in October 2015  Upon expiry of the direct local sales contract, KRG commenced direct lifting

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September and 7 October 2015, respectively from the Khor Mor plant through a nominated local contractor. This continued till December 2015.  RWE acquired a 10% working interest in PPCL as part of its arbitration settlement in November 2015

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5 10 15 20 25 30 35

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

*Current Condensate Gas Ratio (CGR) on Khor Mor is c. 45 bbl/mmscf comparable to Qatar North Field CGR of 47~50 **2015 data based on Dana Gas’s reported share of gross production in the KRI of 29.3kboepd

*

Pearl Petroleum Company Ltd ownership:

Dana Gas 35 % Crescent Petroleum 35 % OMV 10 % MOL 10 % RWE 10 %

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10 20 30 40 50 60 70 80 90 100 110 KhorMor + Chemchemal** Miran Bina Bawi Khazzan * (Tight Gas) Oman Leviathan + Tamar (Israel) Zohr (Egypt) Al Hosn (sour gas) UAE Atoll (Egypt) Aphrodite (Cyprus) Salamat (Egypt)

Gas initially in place resources (tcf)

Khor Mor and Chemchemal are potentially largest gas fields in the KRI and comparable to large scale gas developments in the region

Notes: Volumes exclude associated liquid and oil upsides. * Recoverable volume expected to be 10%-15% of gas initially in place at Khazzan **PPCL’s latest P50 estimate of total risked in place resources is 75tcf (Khor Mor + Chemchemal)

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Large Gas Developments in MENA (Source: Company disclosure)

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Dana Gas: Project Update – Zora Gas, UAE

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Zora Offshore Platform - Ready for gas production

 Platform installation, hook up and commissioning completed.  Wire line operation for un-plugging the well completed successfully.  Repair works completed on the

• ffshore pipeline,

where concrete coating was damaged by Third party vessel anchors.

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Zora Gas Processing Plant - Construction completion and handover

 All systems powered up, commissioning activities and start-up ongoing.  Commissioning

• f truck loading

facility for condensate export completed.

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Zora Operations start-up progress

 First gas delivered to site 10/01/16.  Pipeline and well cleaned up with well flowing approx. 45 mmscfd.  Gas production started on 14/01/16.  Gas processing shutdown again 15/01/16, due to foaming problems. Contaminated chemical inventories changed and pipeline cleaned to remove well fluid liquid build up.  Gas processing re-started 21/01/16,

• perating problems encountered with vessel

level measurements.  Remedial modifications carried out and plant returned to operations for start up 04/02/16.  Plant ready for restart but advised by SNOC that SEWA power station unable to receive gas due to other planned maintenance activities ongoing.  Planned to re-commence commissioning and start-up end Feb 2016.

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Dana Gas: Credit Metrics

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Additional financial information

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*LTM as of Q3 2015 results

Period Unit Value EBITDA LTM US$m 191 EBIT LTM US$m 93 Net debt Current US$m 379 Net debt / EBITDA LTM x 2.0 Interest cover ratio LTM x 1.4 Book leverage (Net debt / Total assets) Current x 10% Average years to maturity Current Years 1.7

Dana Gas additional financial metrics

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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: $400 mln  Coupon: 9% (payable quarterly)  Maturity: 31/10/2017

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Source: Bloomberg. Market data as at 16 February 2016. Dana Gas share price vs. convertible trading value Dana Gas convertible mid yield to maturity 0.0 0.2 0.4 0.6 0.8 1.0 1.2 20 40 60 80 100 120 140 Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16

Share price (AED) Convertible trading value (USD)

Sukuk convertible trading value (USD) Dana Gas share price (AED) 2 4 6 8 10 12 14 16 18 20 Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16

Convertible mid yield to maturity (%)

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Leverage and interest coverage ratio in line with peers

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Note: Net debt is as of latest reports. EBITDA is a LTM value as of 9M 2015. Note: EBIT and Interest expense are LTM values. Lundin based on 2015 actuals. Source: Bloomberg Debt servicing: Net debt / EBITDA Interest cover ratio

• 10
• 8
• 6
• 4
• 2

2 4 DNO Premier Dana Gas Petroceltic Genel Lundin Tullow

Net debt / EBITDA

• 18
• 16
• 14
• 12
• 10
• 8
• 6
• 4
• 2

2 4 Dana Gas DNO Premier Genel Tullow Lundin Petroceltic

EBIT / Interest expense

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Book gearing and Leverage comparable to industry peers

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Source: Bloomberg. Market data as at 16 February 2016. Debt to common equity Total debt to total assets 10 20 30 40 50 60 70 80 90 Lundin Premier Tullow DNO Petroceltic Dana Gas Genel

Total debt to total assets

100 200 300 400 500 600 Lundin Premier Tullow DNO Petroceltic Dana Gas Genel

Debt to common equity

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Long reserve life of assets underpins debt

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*Dana Gas 2P reserves include KRI estimates of 525mmboe net to Dana Gas from Khor Mor

Source: Bloomberg. Market data as at 16 February 2016. Years to average maturity 2P reserve life 1 2 3 4 5 6 Tullow DNO Premier Genel Dana Gas Lundin Petroceltic

Years to average maturity (#)

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

2P reserve life (years)

*

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Dana Gas: Relative Valuations

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EV and Production valuation relative to peers

Source: Company Data, Bloomberg

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Source: Bloomberg. Market data as at 16 February 2016. Enterprise value vs 2015 production

10 20 30 40 50 60 70 80 90 100 1 2 3 4 5 6 7 8 9 10 Lundin Tullow Premier Dana Gas DNO Gulf Keystone Genel Petroceltic Circle Oil Transglobe

WI Production (kboepd) Enterprise Value ($ bn)

EV ($bn) 2015 Production (kboepd)

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Price / EPS (2017E) 20.5 19.8 13.0 12.2 8.4 5.1 n.a. 5 10 15 20 25 Premier Lundin Dana Gas Tullow Genel DNO Petroceltic

Price / EPS (2017E)

Price / CPS (2017E) 4.1 2.8 2.5 2.4 1.9 1.6 0.4 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 Lundin DNO Petroceltic Dana Gas Genel Tullow Premier

Price / CPS (2017E)

EV / EBITDA (2017E) 6.8 6.4 5.3 5.0 2.9 2.6 2.5 1 2 3 4 5 6 7 8 Lundin Petroceltic Dana Gas Tullow Premier Genel DNO

EV / EBITDA (2017E)

Significantly undervalued relative to peers

Source: Bloomberg Consensus as of 16/02/2016

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Mean * ~13.2 Mean* ~4.5

* European Peers mean ratio

Mean* ~2.3 Mean* ~2.2

www.danagas.com ‐100% ‐90% ‐80% ‐70% ‐60% ‐50% ‐40% ‐30% ‐20% ‐10% 0% Indus gas DanaGas Lundin Petroleum Det Norske Brent Soco Intl. Cairn Energy Shamaran Green Dragon Western Zagros Africa Oil Faroe Petroleum Bowleven Lekoil Karoon Gas Ophir Energy DNO Maurel & Prom Rockhopper Vaalco Ithaca Kosmos Inter oil Tullow Oil Gulf Keystone TransGlobe EnQuest Circle oil Bankers Petroleum Cobalt Sterling Resources Premier Oil Genel Petroceltic Oryx Petroleum

Relative Performance

EMEA E&P relative performance since 1st July 2015

Source: Bloomberg, performance as of 16/02/2016

Relative market performance since 1st July 2015 37

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‐80% ‐70% ‐60% ‐50% ‐40% ‐30% ‐20% ‐10% 0% 10% 20% Lundin Petroleum Maurel & Prom Shamaran Africa Oil Cairn Energy Det Norske Indus gas Green Dragon Soco Intl. Western Zagros Karoon Gas Rockhopper Brent Tullow Oil Faroe Petroleum DanaGas Lekoil Inter oil Ithaca Ophir Energy Bowleven Kosmos DNO Circle oil Vaalco Premier Oil TransGlobe EnQuest Oryx Petroleum Sterling Resources Bankers Petroleum Gulf Keystone Genel Cobalt Petroceltic

Relative Performance

EMEA E&P relative performance since October 2015

Relative market performance since October 2015 38

Source: Bloomberg, performance as of 16/02/2016

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Source: Bloomberg. Market data as at 16 February 2016.

Relative performance of Dana Gas vs market indices

(60%) (40%) (20%)

• 20%

40% 60% 80% 100% 120% 140% Jan 13 Apr 13 Jul 13 Oct 13 Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15 Jul 15 Oct 15 Jan 16

Relative performance (%)

Abu Dhabi Index +57% S&P GCC Index +20% Dana Gas +7% MSCI EM Index -31% FTSE 350 Oil & Gas Index -34%

Relative share price performance of Dana Gas

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Approval of Sukuk refinancing Achieved record 2013 production in Egypt Partial award in KRI Arbitration Received US$53mln from Egypt Upgraded El Wastani plant and signed agreement for Block 6 Tribunal order for KRG to restore the previous regular payments Signed the GPEA in Egypt Successful resolution of RWEST Arbitration

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Source: Bloomberg. Market data as at 16 February 2016.

Relative performance of International peers since Oct 2015

(80%) (60%) (40%) (20%)

• 20%

40% 60% Oct 15 Nov 15 Dec 15 Jan 16 Feb 16

Relative performance (%)

Lundin +12% Tullow -12% Dana Gas -13% Premier -52%

Dana Gas has performed in line with international peers in H2 2015

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Source: Bloomberg. Market data as at 16 February 2016.

Relative performance of International peers since July 2015

(100%) (80%) (60%) (40%) (20%)

• 20%

40% Jul 15 Aug 15 Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16

Relative performance (%)

Dana Gas -2% Lundin -12% Tullow -53% Premier -78%

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Source: Bloomberg. Market data as at 16 February 2016.

Relative performance of ME peers since October 2015

(100%) (80%) (60%) (40%) (20%)

• 20%

40% 60% Oct 15 Nov 15 Dec 15 Jan 16 Feb 16

Relative performance (%)

Dana Gas -13% DNO -33% Gulf Keystone -57% Genel -61% Petroceltic -69% Source: Bloomberg. Market data as at 16 February 2016.

Relative performance of ME peers since July 2015

(100%) (80%) (60%) (40%) (20%)

• 20%

40% Jul 15 Sep 15 Nov 15 Jan 16

Relative performance (%)

Dana Gas -2% DNO -43% Gulf Keystone -63% Genel -79% Petroceltic -81%

Dana Gas has outperformed its Middle Eastern (ME) peers in H2 2015

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Summary

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Summary

 2015 has been a tough year with a difficult business environment, and the future is continuing to look challenging with oil having already hit a low of $27/bbl this year.  However, it has also been a year of significant progress:  Rejuvenated the management team with the appointment of Iman Hill, as Technical Director and GM for the UAE and Egypt and appointed a new CFO, Chris Hearne, who joined us just after year- end  Egypt has exceeded expectations with its reserves upgrade, success in the development and exploratory appraisal drilling program in Balsam has opened up the field to further appraisal wells and growth potential  Exploration growth potential is being tested in Blocks 1, 3 and 6. On Block 3, drilling of the deep Oligocene HPHT well by BP as operator with DG cost carried should show results by end 2016, and in the success case will be a game changer for the Company  Zora, the flagship UAE project and also the first offshore project – has been completed and gas has already been processed through the plant  The increase in reserves figures represents real progress that better reflects the underlying true value of the Company to it’s shareholders  Positive results were achieved in our arbitration cases  Dana Gas is better prepared to face the challenges of the current lower oil price environment and positioned for the future upturn  We are confident that we can continue to add value to our shareholders even at the prevailing low oil prices

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Contact Us: Dana Gas PJSC

• P. O. Box 2011, Sharjah, UAE

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

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