PA Resources AGM 2012

PA Resources

AGM 2012

Annual General Meeting

Bo Askvik, President & CEO

PA Resources

where we are today

»

No value in the North Sea

asset portfolio

»

Marginal value recognised

in Block I, Equatorial Guinea

»

High investment level,

capex/produced barrel

equal to 80 USD

»

New play discoveries in

Denmark as operator

»

Aseng investments recovered

after 9 months - strong future

cashflow

»

Significantly lower investment

level, capex/produced barrel

equal to 6 USD in Q1 2012

Focusing on

Africa and North Sea

* Million barrels of oil equivalents, Working Interest figures per 31 Dec. 2011

KEY FACTS:

• Oil and gas company with operations and assets in nine countries

• Exploration, development and production portfolio - key infrastructure assets in Africa

• Oil production in Equatorial Guinea,

Republic of Congo (Brazzaville) and Tunisia

• Average production of 8,700 bopd in Q1 2012

• 60.2 million mmboe in 2P reserves and 145 mmboe in contingent resources*

• 130 employees in Tunisia, the UK and Sweden

25

oil and gas licences

6

producing fields

9

potential commercial discoveries Operator of

12

licences Production Development Exploration

Shareholder structure

per March 2012

Number of shares Capital/votes

AVANZA PENSION 53,990,324 8.5% NORDNET PENSIONSFÖRSÄKRING 21,657,208 3.4% LÄNSFÖRSÄKRINGAR FONDER AB 17,270,874 2.7% CBNY-DFA-INT SML CAP V 15,454,377 2.4% ROBUR FÖRSÄKRING 10,883,241 1.7% AB TRACTION 10,778,014 1.7%

VOB & T HOLDING AB 10,000,000 1.6% SEB S.A., W8IMY 9,378,446 1.5% JP MORGAN BANK 7,765,220 1.2%

JPM CHASE NA 7,724,045 1.2%

Total - 10 largest shareholders 164,901,749 25.9%

Total - other shareholders 472,575,144 74.1%

Total number of shares 637,476,893 100%

• The share listed on NASDAQ OMX Stockholm (Mid Cap)

• Market capitalization of approx. SEK 920 million

• Enterprise value of approx. SEK 4.3 billion and

Nomination committee in 2011:

• Länsförsäkringar

• AB Traction

Financial

Review

Macro perspective

•

Geopolitical uncertainty continues

•

European debt crisis and outlook of global economy coming year uncertain

•

Lack of extra production capacity

•

Demand still driven by growth

economies such as China and India

•

Transport sector increasing in pace with population and GDP

•

It is getting more difficult to find oil

•

Existing producing fields have a natural decline rate of 4% a year

•

+40 million barrels per day needed from new producing fields by 2030

0 20 40 60 80 100 120 140 160 2006 2007 2008 2009 2010 2011 2012

Brent price trend 2006 - 2012

Production trend

and update

CONGO: Azurite

• Marked decline in one well since February 2012, well flowing at minimal rate

• Technical and economic analysis of remedial options ongoing

• One week shutdown for annual field maintenance planned for in late May 2012

EG: Aseng

• Higher target level of around 60,000 boepd reached in early March 2012

• Fifth production well on stream - all wells contributing fully, gas re-injection fully commissioned

• Frequent liftings

EG: Alen

• Delopment project on plan for production start 2013, significant cost synergies reducing opex

Average production per country/bopd

0 2 000 4 000 6 000 8 000 10 000 12 000 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012

Production

and sales

Average quarterly production/bopd bopd Full Year

2011 Q1 2012 APRIL 2012 West Africa 5,300 6,200 5,700 North Africa 3,300 2,500 2,700 Group Total 8,600 8,700 8,400

Average sales price USD/bbl LIFTINGS IN 2012: Q1 - EARLY APRIL

• 546,000 bbls from Aseng and Tunisia in Q1

• 520,000 bbls from Azurite on 4 April (Q2 2012) 71 78 72 82 97 109 106 104 120 77 79 78 85 106 117 113 ₁₀₉ 119 20 40 60 80 100 120 140 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 PA Resources Brent 0 2 000 4 000 6 000 8 000 10 000 12 000 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012

Earnings and

key ratios

Q1 2012 Q4 2011 FY 2011 FY 2010

Production (bopd) 8,700 8,400 8,600 10,700 Oil price (USD/barrel) 120 104 103 76

Revenue (SEK million) 650 535 2,154 2,227 EBITDA (SEK million) 395 306 1,295 1,276 EBITDA margin 60.8% 57.2% 60.1% 57.3% Profit before tax (SEK million)* 68 11 158 179 Profit for the period

(SEK million)*

-31 -96 -326 -316

Earnings per share (SEK) -0.05 -2.91 -3.27 -0.61

* Figures for 2011 exclude non-cash, one-off costs of SEK 2,035 million before tax and SEK 1,758 million after tax.

1,613 32 240 - 375 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2011 2012 SE K m il li on

Significantly

lower capex in 2012

Actual Forecasted

Capex 2011 - 2012

Tunisia: Zarat Elyssa Q4 2012/2013 Appraisal/1

Tunisia: Makthar 2013 Exploration/1

EG: Block H Aleta Q4 2012/2013 Exploration/1

DK: 12/06 Lille John 2013 Appraisal/1 Drilling program/planned wells 2012-2013

KEY COMMENTS

• 2012 forecast of SEK 240-375 million

• Capex of SEK 32 million in Q1

Improved

cash flow

SEK million Q1 2012 Q4 2011 FY 2011 FY 2010

Operating cash flow 175 -106 812 416 of which income

taxes paid

-3 -7 -45 -230

CAPEX -32 -135 -1,613 1,585 Financing activities -13 36 -408 2,321

Net cash flow 131 -204 -1,209 1,152

AZURITE LIFTING – Q2 2012

• Azurite lifting on 4 April adds SEK 400 million cash flow, and reduces net debt

• PA Resources’ next planned lifting from Azurite in early 2013

Refinancing

activities

•

5 year senior unsecured NOK 900 million bond loan issued in March 2011 to refinance maturing loans in 2011 and 2012

•

Total amortizations of net SEK 408 million in 2011

•

As per 25 April net debt reduced by SEK 580 million since year end amounting to SEK 3.4 billion

•

Next maturity in October 2013

0 200 400 600 800 1000 1200 May - Dec. 2012 2013 2014 2015 2016 Maturity structure

Bonds and convertibels (SEK million)

Reduced

debt

KEY COMMENTS – Q4 2011

• Substantial reduction in 2P reserves on Azurite field

resulted in impairment of SEK 1,436 million

• Write-down of SEK 599 million related to Didon North and divestment of El Bibane and Ezzaouia fields in Tunisia

Balance Sheet (SEK million) 2011 2010

Non-current assets 7 910 8 952

Current assets 981 1 946

Total assets 8 892 10 898

Equity attributable to owners

of the parent 3 270 5 250

Non-current liabilities 4 031 3 606 Current liabilities 1 592 2 042

Total equity and liabilities 8 892 10 898

25 April* Q1 2012 Q4 2011 Covenant

Book Equity (SEK million) 2,994 2,994 3,270 >2,000

Book Equity to

Capital Employed 46% 43% 45% >40%

Operational

update

IMPORTANT EVENTS

Equatorial Guinea:

• Early production start at the Aseng field in November 2011, adding frequent cash flow from Q1 2012

• Alen development in progress adding significant cost synergies to PAR, production start in 2013

• New operator for Block H

Congo:

• Azurite development completed with lower production than expected, booked 2P reserves written down by 6 mmboe

• Exploration well on Marine XIV found non-commercial hydrocarbons

Highlights 2011:

West Africa

12.2 20 62 0 10 20 30 40 50 60 70 2P Reserves Contingent Resources Risked Prospective Resources West Africa

Reserves and resources (mmboe)

SEK 780 million

in investments

SEK 3,304 million

in non-current assets

IMPORTANT EVENTS

• Allocation of reserves and development planning of Zarat field in progress

• Production well on the satellite field Didon North failed

• No commercial discoveries found on Jelma

• Disposal of two small producing fields - El Bibane and Ezzaouia

• Political situation resulting in social instability affecting activities in the country

Highlights 2011:

North Africa

SEK 486 million

in investments

SEK 3,848 million

in non-current assets

3,300 barrels/day

in average production

48 91 48 0 20 40 60 80 100 2P Reserves Contingent Resources Risked Prospective Resources North Africa:

IMPORTANT EVENTS

• Discovery of gas and condensate on Broder Tuck in Danish licence 12/06

• Oil discovery in the Miocene structure on Lille John in Danish licence 12/06

• Seismic analysis completed in Greenland resulting in a number of sizable prospects and leads

• Awarded new licence in Germany, adjacent to Danish 12/06

Highlights 2011:

North Sea and Greenland

SEK 347 million

in investments

SEK 758 million

in non-current assets

34 299 0 50 100 150 200 250 300 350 2P Reserves Contingent Resources Risked Prospective Resources

North Sea and Greenland:

Successful drilling campaign on 12/06 in Denmark

PA Resources 64% (Operator)

Background

• 12/06 licence located in the Danish part of North Sea

• Adjacent to existing oil and gas infrastructure

• Exploration well drilled in 1975 (Broder Tuck field today), encountered a gas column

• Awarded adjacent German licence in January 2011, before successful drilling

Denmark 12/06: Thorough geoscience analysis

PA Resources 64% (Operator)

Pre-drill perceptions

•

1975 well with small gas column in Middle Jurassic

•

Industry perception of Chalk as only target in area, with high risk on oil charge

Our perceptions

•

Structures drilled historically on 2D data – 3D acquired in past but no subsequent exploration drilling

•

Lies in Danish Central Graben – large fields nearby

What we did

•

Use of 3D to define Lille John as multi-target prospect (Miocene, Chalk, Middle Jurassic)

Denmark 12/06: Discoveries and way forward

PA Resources 64% (Operator)

Licence Group: Operator PA Resources (64%),

Danish North Sea Fund (20%), Spyker Energy (8%), Danoil (8%)

Lille John-1 Broder Tuck - 2

B20008-73 12/06

Broder Tuck

•

360m+ gas and condensate column proved by wells

•

High quality Middle Jurassic reservoir

•

Mid to high case assessment of c. 25-50 mmboe gross of contingent resources including liquids

•

2012 work programme to progress development planning towards commercialisation

Lille John

•

Wells established 35 API oil in Miocene sandstone at c. 900m – exceptionally light oil for shallow depth

•

Obvious seismic anomaly at Miocene

•

Recognition of shallow light oil re-focussed work on developing a Miocene prospect inventory

•

Likely to be remaining deeper potential – Chalk remains and well result upgrades Middle Jurassic

•

2012 work programme to reprocess 3D to determine prospect inventory and appraisal well location,

PA Resources’ operator with focus on HSE

Objective - safe drilling campaign with minimal impact

• Total working hours; 184,149 or 7,673 man days with an average of 72 personnel on board during operation

• Reportable incidents; 0 environmental incidents, 3 reportable incidents, 0 lost time incidents, 1 first aid case

• HSE audits; > 100 audits by PA Resources’ rig-based HSE supervisor

• Transportations; 6,698 tonnes of equipment moved to/from rig in 68 supply boat sailings

• Use of chemicals; 238.8 tonnes of chemicals discharged being 96.3% designated Green substances which pose little or no risk to environment

• Use of environmentally harmful substances; usage of only 15.6 tonnes of 221 tonnes in total that PA Resources was permitted to use, of which, zero tonnes discharged to the environment

Success factors and the 12/06 team

Key success factors

•

Careful, diligent work and formed own evidence-based views on prospectivity

•

Conducted a safe drilling campaign with minimal impact to highest standards

•

High degree transparency to joint venture partners and DEA

•

Professional team and good communication

PA Resources UK – the 12/06 team

Fiona Goodfellow

Geoscience Project Leader

Dave Mackertich

Senior Geoscientist

Mark Attree

Exploration Manager

Jon Lucas

Geotechn. & HSE Manager

Graham Goffey

Regional Director

William Tyrell

Reserves and

valuation

2011

Reserves and resources

2P Reserves

• Aseng derisked – 6 months in production

• Alen production start in 2013 Contingent Resources

• Danish discoveries on 12/06 added 32 mmboe

Risked Prospective Resources

• Seismic analys of Greenland licence added significant volumes

• Danish 12/06 exploration potential

60.2 145 409 72.5 141 297 0 50 100 150 200 250 300 350 400 450 2P Reserves Contingent Resources Risked Prospective Resources 2011 2010

Overview:

Assets per classification

● Azurite ● Didon ● Tunisia onshore ● Zarat liquids ● Block I: ● Aseng ● Alen ● Didon ● Zarat gas ● Elyssa ● Zarat permit ● Didon North ● Denmark 12/06 ● Block I (other)

● Mer Profonde Sud

● Marine XIV

● Netherlands

● Tunisia: Jelma, Makthar, Jenein Centre, Zarat permit

● UK

● Mer Profonde Sud (Miocene & Sendji)

● Marine XIV

● Block I and Block H

● Netherlands: Schagen, Q7 ● Denmark: 12/06, Gita/Maja ● Greenland, Block 8 60.2 mmboe 145 mmboe 409 mmboe

2P Reserves Contingent Resources

Risked

Current valuation

of

2P reserves

Peer group

2012

*

PAR

AGM 2012

PAR

AGM 2011

Market capitalisation 920 2,665 Net debt 3,400 3,280

Enterprise value SEK million 4,320 5,945

Enterprise value USD million 1,124 640 950

2P boe million 77 60.2 72.5

Value/2P boe (USD) 14.60 10.60 13.10

PAR oil price (USD) 120 103

Indicative

valuation of selected assets

Producing: 17.2 18 - 28 310 - 482 North Africa: • Tunisia West Africa: • Congo (Azurite) • EG (Aseng) To be developed: 43.0 37.8 4.5 – 8.5 364 - 686

• Tunisia: Zarat field

• EG: Block I

• Denmark: Broder Tuck

Total 674 – 1,168 Net debt -500 (Market) value 174 - 668 SEK/share *equivalent 1.85 – 7.00 60.2 mmboe 145 mmboe 2P Reserves Contingent

Strategic focus

update

Develop prioritised assets Increase reserves and resources Strengthen capital structure

Increase value from existing assets

•

Azurite and Aseng completed

•

Alen production start in 2013

Development of prioritised assets in Africa

Selective exploration activities

•

Discoveries on 12/06 in Denmark

Strengthen captital structure

•

Refinancing activities in 2011

•

Net debt reduced by SEK 600 million in Jan. – April 2012

•

Low capex – positive cash flow in 2012

Outlook and

focus 2012

•

Technical and economic analysis of

remedial options for Azurite well

•

Appraisal drilling and development

planning of Danish discoveries towards

commercialisation

•

Selective appraisal and exploration

activity in EG: Block I and Block H

•

Progressing the Zarat field and Block I

development projects

Thank you!