Rocksource ASA Swedbank First Securities’ 2013 Nordic Energy Summit 21 March 2013 CEO Chris Spencer
Disclaimer This presentation contains information provided by the management of Rocksource ASA with respect to historical and expected performance of the business as well as the historical and expected performance of its industry. Information related to expected performance in this presentation reflects assumptions, made by the management on the basis of concluded information available, many of which will not be within the control of the company and its management. These assumptions may or may not prove to be correct, and thus there can be no certainty that the projections will materialise in the manner in which the management has assumed. No representations or warranties are or will be made by Rocksource ASA concerning the anticipated performance of the company related to this presentation. This presentation may not be used for the purpose of, and does not constitute, an offer to sell, issue or subscribe for, shares or other securities in Rocksource ASA. Any person who, willing or unwilling, gains possession of the whole or parts of this presentation is explicitly made aware of this restriction and is required by Rocksource ASA to make themselves aware of this fact. Any dispute that might arise regarding this presentation shall be governed by Norwegian law and the sole jurisdiction of the Norwegian courts, with Oslo District Court as legal venue. Slide: 2
Table of contents ● Introduction to Rocksource ● Exploration programme update ● Summary and outlook ● Appendix Slide: 3
Rocksource at a glance ● Rocksource is an oil and gas exploration company focusing on the Norwegian Continental Shelf (NCS) ● Exploration model: Combining solid geological expertise with advanced seismic and EM data analysis ● 14 licenses on the NCS, including the Norvarg discovery ● 12 leases in the Gulf of Mexico, 1 in the UK ● Five NCS wells expected over the next two years, with net unrisked potential of 15ommboe ● Company repositioned in 2012: New drill queue established; 2012/13 exploration cost carried; bond debt paid ‐ off and G&A level reduced Rocksource’s NCS licenses Slide: 4
Targeting 3-4 value driven wells per year Mix of “premium” and “bread and butter” exploration Five year portfolio (~20 wells) Rocksource strategy*: One year snap ‐ shot Value in case of discovery 3 to 4 wells “Premium” per year 10 ‐ 15% stake at time of drilling High “Bread & butter” Medium X 100mmboe* “Premium” “Bread & butter” Low/med risk & volumes Higher risk & volumes X 2 or 3 wells per year 1 or 2 wells per year 50mmboe** ● ● COS 30% ‐ 40% COS 15 – 30% Low 20% 30% ● ● Prospect size: 40 – Prospect size: 100+ 100 mmboe (P50) mmboe (P50) High Medium Low ● ● Mature areas, close Potential for stand ‐ to infrastructure alone development Prospect risk * Activity level dependent on access to wells with attractive commercial ** Volumes indicative only. Real measure is financial value. potential For example, oil near infrastructure can be smaller than gas away from infrastructure Slide: 5
Firm wells provide good mix of risk and potential Illustration of risk and value potential from upcoming wells; Estimated volumes are mean unrisked, net to Rocksource Value potential High PL 506S Storbarden 60 mmboe PL 528 Ivory 42 mmboe Medium PL 659 Langlitinden PL586* 13 mmboe Pil & Bue 5 mmboe PL 535 Norvarg 32 mmboe Low High Medium Low Prospect risk *Farm ‐ in September 2012, subject to positive drill decision. Drill or drop expected in 2Q 2013. Slide: 6
Working capital incl. carry of NOK ~190 million MNOK 400 350 300 122 150 142 250 200 57 41 150 96 100 190 149 50 89 - Cash and cash Refund of Refund of 2012 Repayment of Other working Working capital Net Valiant Working capital NOK 150m equivalents deferred tax exploration 2012 expl. capital 31.12.2012 carry fund, incl. Valiant Exploration 31.12.2012 assets, Dec. cost, Dec 2013 credit facility, after tax and carry fund, credit facility 2013 Dec. 2013 financing * after tax and with SEB financing * As of year ‐ end 2012 the unused part of the NOK 200 million Valiant carry fund is NOK 164 million pre tax, equal to approximately NOK 41 million after tax and financing ● The Company is financed for its committed activity set through 2013, including three sanctioned wells ● With an ambition to increase the activity set beyond the committed activities, the Company is continuously evaluating appropriate measures to strengthen its financial base in support of further growth Slide: 7
Corporate restructuring completed 31 Dec. 2012 Current structure New structure Rocksource ASA Rocksource ASA NCS operations NCS operations UK subsidiary NCS subsidiary UK subsidiary GoM subsidiary GoM subsidiary Rocksource Geotech Rocksource Geotech Other subsidiaries Other subsidiaries ● Reorganisation has created an entity more aligned with the operations and jurisdictions ● Transaction will release tax loss carried forward in Rocksource ASA in December 2013* * The reorganisation will have the effect that the parent company, Rocksource ASA, will discontinue its direct petroleum activities on the NCS. As a consequence of the restructuring, Rocksource will claim payment from the Norwegian government of the tax value of its uncovered losses pursuant to the Norwegian Petroleum Taxation Act section 3(c)(4). The Company has received the details of the tax assessment for 2011 from the Oil Taxation Office. Based on the details, which covers tax years up to and including 2011, and preliminary calculations for 2012, the expected payment amounts to approximately NOK 96 million. Slide: 8
A new and experienced management team Chris Spencer Tommy Sundt Morten Haukebø Annelin N. Haaland Per Anders Muri Rolf Monsen CEO CFO VP HSSE&Q VP Commercial & CTO Exploration Manager Communication NCS x xx x xx Sub ‐ surface Skills / Experience xx HSSE&Q xx xx x xx x Commercial x xx xx Finance ● 20 years of ● 17 years work ● CFO since start ‐ up ● 25 years of ● Previously with ● +20 years working industry experience with of Rocksource industry Revus Energy production and experience with Hydro & Statoil ● Former bus.dev., experience, most (Wintershall) exploration for Experience & ● Cand Scient ● 18 years Shell & BP recently with Statoil , North Sea portfolio manager achievements ● Charterred Odfjell Drilling and international degree in and auditor. 17 experience within engineer Reservoir years finance & communications Geophysics economics experience Slide: 9
Exploration focused organisation Personnel by profession Work force: 25 20 ● Employing a total of 35 oil and gas professionals 15 • Offices in Bergen (HQ, technical) and Oslo (finance, IR, 10 commercial and accounting) 5 0 Management G&G Commercial & Finance HSE & support Qualifications: engineering Average no. of years experience by profession ● Highly competent and skilled workforce with a focus on exploration and with complimentary competences 30 25 throughout the value chain 20 • NCS focused exploration strategy with preference for 15 10 prospects with DHI* support (seismic and/or EM) 5 • Subsurface organisation restructured and lessons learned 0 Management G&G Commercial & Finance HSE & Support incorporated Engineering No. of awards in last two numbered round on the NCS ● Qualified as operator on the NCS • Passed PSA pre ‐ drill audit as operator with no exceptions 8 • Drilling operations completed without any incidents 6 4 ● On average each Rocksource employee has 15 years 2 of experience, mainly from NCS 0 Rocksource Noreco North Energy Spring Energy Front Det norske Exploration * Direct Hydrocarbon Indicator Slide: 10
A proven NCS operator ● Rocksource is a proven operator on the NCS • Passed PSA pre ‐ drill audit as operator with no exceptions • First operated well drilled in 2011 and completed without any incidents • The Company’s second operated well is estimated to spud in March/April ● Successful operator experience in the North Sea a prerequisite for operating in the Norwegian Sea and the Barents Sea • Increased opportunity set for proven operators ● In house capabilities include: • Well Construction Team, licenses competence, G&G The semi ‐ submersible drilling rig Borgland Dolphin. Rocksource will operate the Borgland Dolphin in 1Q competence, HSSE&Q (including emergency preparedness) 2013, drilling the Storbarden prospect in PL 506 in the Stord Basin AMI = Areas of Mutual Interest Slide: 11
Table of contents ● Introduction to Rocksource ● Exploration programme update ● Summary and outlook ● Appendix Slide: 12
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