Proposed merger of RAK Petroleums MENA operating subsidiaries into DNO Oslo, 5 September 2011
Agenda Merger agreement Background and strategic rationale RAK MENA assets The enlarged DNO Q&A session 3
A good strategic and industrial fit Diversification in reserves and resources, production, exploration and geography Increased robustness for continued growth, with stronger potential for value uplift Merging two experienced and…
Summary of proposed transaction The Heads of Agreement (4 July 2011): The RAK MENA assets should be valued between USD 250-300 million Payment to RAK Petroleum PCL should be in DNO shares issued at a range between NOK 8.25 and 10 per…
Transaction governance RAK Petroleum related board members have abstained from voting, involvement in valuation and discussions on the DNO side The proposal is supported by all independent board members and DNO management The…
Background and strategic rationale
Acquiring attractive assets Geographical concentration with well defined petroleum systems in Oman, the UAE and Tunisia Diversified portfolio 8 blocks Stable producing fields Development projects Exploration prospects High margin…
Strategic rationale for the merger In line with DNOs strategy to secure robust growth in the MENA region Diversifying portfolio, increasing stability and predictability in production and cash flow Immediate increase in production and…
Production and reserves
Potential for further increased production Immediate increase of production from RAK MENA RAK MENA operations may double in 2012, based on additional production wells on Bukha / West Bukha Producon and contingent on a successful…
2P reserves (WI) 400 350 Mboe 2P reserves on WI basis 300 250 200 150 100 50 0 DNO ASR + June Combined DNO and RAK DNO CPR figures RAK CPR figures intermediate update MENA CPR figures Saleh 17.9 17.9 RAK B…
Increased diversification of 2P WI reserves outside Kurdistan Distribution of RAK MENA reserves (oil equivalents): - Liquid 22.3 UAE 23 mmboe Gas 29.7 Kurdistan Other Oman 342 mmboe 65 mmboe 29 mmboe Yemen 13 mmboe…
Valuation
Valuation process Evaluation of the reserves and resources of both parties and technical valuation of the assets by DeGolyer & MacNaughton (D&M) The technical net asset values for DNO and RAK presented in the CPR have been the main…
Valuation by D&M RAK MENA NAV as evaluated by D&M, USDm D&M has estimated RAK MENA to 1P 2P 3P 2C have a 2P technical value of Block 8 83 177 265 n/a USD 481m Saleh / RAK B n/a 304 476 n/a Total 83 481 741 n/a DNOs 2P reserves…
Transaction price above trading level, but in line with broker targets Current share Med Target Price: DNO share price performance relative to peers (last 12 months) Broker recommendations Median target of NNOK price NOK 5.5 OK 9.5…
Description of RAK MENA assets
Asset overview Portfolio of 8 blocks in well defined petroleum systems in Oman, the UAE and Tunisia Cash generative Able to fund further exploration and development drilling Producing fields Bukha & West Bukha, Block 8 offshore…
RAK MENA Reserve summary RAK MENA operaUng subsidiaries working interest reserves All figures in mmboe WI 1P 2P 3P Oman Bukha (Block 8) 50% 0.8 7.4 11.5 West Bukha (Block 8) 50% 12.8 21.8 33.8 Total 13.6 29.2 45.4 United Arab…
RAK production forecasts Working interest production forecast 20 Working Interest Production Forecast (mboepd) 1 Saleh / RAK B Block 8 15 10 5 - H2 2011E 2012E 2013E 2014E Note: Producon forecasts are…
RAK MENA Existing production Oman Block 8 Bukha Field Gas / condensate field in production since 1994 Unmanned platform Plans to drill another well, Bukha 4, to the North of the field in Q2 2012 West Bukha Field 20km north west of…
RAK MENA Development projects Key Facts Saleh Ownership RAK MENA, 70%1 (operator) United Arab Emirates Fiscal Regime Tax / Royalty System Saleh field Gross ultimate mmboe WI (remaining) In production from 1984 until recently, with…
RAK MENA Development projects Oman Key Facts Block 8 Block 30 Block 8 Ownership RAK MENA, 50% (operator); RAK MENA, 100% (operator) Tibat Discovery under consideration for LG International, 50% development Fiscal Regime…
RAK MENA Development projects Key Facts RAK B United Arab Emirates Ownership RAK MENA, 70%1 (operator) RAK B Fiscal Regime Tax / Royalty System Discovered in 1973, but was determined to Gross ultimate recovery 2P 7.0mmboe 3P…
RAK MENA Exploration prospects Key Facts Block 31 Block 47 Oman Onshore Ownership RAK MENA, 100% RAK MENA, 50% (operator) (operator); Repsol Block 31 Exploracion, 50% Two seismic acquisition campaigns carried out in Fiscal…
Key Facts RAK Onshore Hammamet Offshore RAK MENA Ownership RAK MENA, 100% (operator) RAK MENA, 30%; Chinook Energy, 35% (operator); Cooper Energy, 35% Exploration prospects Fiscal Regime Tax / Royalty System Production Sharing…
Fiscal terms Oman Block 8 PSA regime No royalties or production bonuses Favorable and attractive cost recovery mechanism Saleh / RAK B Tax / royalty regime C factor based payments, with attractive terms No taxes and royalties are…
The merged company
The enlarged DNO: A significant E&P player in the MENA region Diversified portfolio of production, development and exploration Strong footprint in the MENA region New production from fast track development of recent discoveries…
The enlarged DNO: Next 12 months outlook Production Plans for increased Tawke production subject to clarification on export payment New production wells on Bukha / West Bukha Some decline in Yemen production until Yaalen start-up mid…
The enlarged DNO: Expected investments DNO capex in 2H 2011 Development USD 36 million Exploration USD 24 million RAK capex in 2H 2011 Development (Saleh 5) USD 40 million Exploration (Wadi Jiffra) USD 10 million RAK capex in 2012…
London listing The enlarged DNO will be a more attractive entity for a London listing The London market is more focused on E&P companies operating in the MENA region London listing is expected to attract a broader investor base…
Process timeline September October November December Announcement of Call for EGM in DNO to Release of Q3 results Pending on EGM vote proposed be held late October primo November closing of transaction transaction terms around…
Creating a more robust platform for further growth in line with the DNOs strategy
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