Aker BP — Investor Presentation 2010

Nov 5, 2010

Third quarter 2010 presentation

TICKER – DETNOR
- CEO Erik Haugane
- VP IR Knut Evensen
- VP HES Anita Utseth

DETNORSKE

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Disclaimer

All presentations and their appendices (hereinafter referred to as "Investor Presentations") published on www.detnor.no have been prepared by Det norske oljeselskap ASA ("Det norske oljeselskap" or the "Company") exclusively for information purposes. The presentations have not been reviewed or registered with any public authority or stock exchange. Recipients of these presentations may not reproduce, redistribute or pass on, in whole or in part, these presentations to any other person.

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[IN RELATION TO THE UNITED STATES AND U.S. PERSONS, THESE PRESENTATIONS ARE STRICTLY CONFIDENTIAL AND ARE BEING FURNISHED SOLELY IN RELIANCE UPON APPLICABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED. THE SHARES OF THE COMPANY HAVE NOT AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT IS AVAILABLE. ACCORDINGLY, ANY OFFER OR SALE OF SHARES IN THE COMPANY WILL ONLY BE OFFERED OR SOLD (I) WITHIN THE UNITED STATES, ONLY TO QUALIFIED INSTITUTIONAL BUYERS ("QIBs") IN PRIVATE PLACEMENT TRANSACTIONS NOT INVOLVING A PUBLIC OFFERING AND (II) OUTSIDE THE UNITED STATES IN OFFSHORE TRANSACTIONS IN ACCORDANCE WITH REGULATION S. ANY PURCHASER OF SHARES IN THE UNITED STATES, WILL BE REQUIRED TO MAKE CERTAIN REPRESENTATIONS AND ACKNOWLEDGEMENTS, INCLUDING WITHOUT LIMITATION THAT THE PURCHASER IS A QIB. PROSPECTIVE INVESTORS ARE HEREBY NOTIFIED THAT SELLERS OF THE NEW SHARES MAY BE RELYING ON THE EXEMPTIONS FROM THE PROVISIONS OF SECTIONS OF THE U.S. SECURITIES ACT PROVIDED BY RULE 144A.

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IN RELATION TO THE UNITED KINGDOM, THESE PRESENTATIONS AND THEIR CONTENTS ARE CONFIDENTIAL AND THEIR DISTRIBUTION (WHICH TERM SHALL INCLUDE ANY FORM OF COMMUNICATION) IS RESTRICTED PURSUANT TO SECTION 21 (RESTRICTIONS ON FINANCIAL PROMOTION) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005. IN RELATION TO THE UNITED KINGDOM, THESE PRESENTATIONS ARE ONLY DIRECTED AT, AND MAY ONLY BE DISTRIBUTED TO, PERSONS WHO FALL WITHIN THE MEANING OF ARTICLE 19 (INVESTMENT PROFESSIONALS) AND 49 (HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 OR WHO ARE PERSONS TO WHOM THE PRESENTATIONS MAY OTHERWISE LAWFULLY BE DISTRIBUTED.]

The contents of these presentations are not to be construed as legal, business, investment or tax advice. Each recipient should consult with its own legal, business, investment and tax adviser as to legal business, investment and tax advice.

There may have been changes in matters which affect the Company subsequent to the date of these presentations. Neither the issue nor delivery of these presentations shall under any circumstance create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that the affairs of the Company have not since changed, and the Company does not intend, and does not assume any obligation, to update or correct any information included in these presentations.

These presentations include and are based on, among other things, forward-looking information and statements. Such forward-looking information and statements are based on the current expectations, estimates and projections of the Company or assumptions based on information available to the Company. Such forward-looking information and statements reflect current views with respect to future events and are subject to risks, uncertainties and assumptions. The Company cannot give any assurance as to the correctness or such information and statements.

An investment in the Company involves risk, and several factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by statements and information in these presentations, including, among others, risks or uncertainties associated with the Company's business, segments, development, growth management, financing, market acceptance and relations with customers, and, more generally, general economic and business conditions, changes in domestic and foreign laws and regulations, taxes, changes in competition and pricing environments, fluctuations in currency exchange rates and interest rates and other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in these documents.

DETNORSKE

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Agenda:

• Highlights & production
• Financials
• Exploration
• Development projects
• Outlook & Summary
• Appendix

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Highlights

• David gas and condensate discovery (PL 102C)
• Secured harsh environment rig to summer 2014
• Currently drilling on Stirby and Dalsnuten
• Eleven exploration wells planned for 2011
• 7 North Sea, 2 Norwegian Sea and 2 Barents Sea
• Applied for prospective acreage in 21st round
• Frøy delayed due to additional reservoir studies
• Key financials:
• Revenues of 80.6 MNOK
• Net loss of 80.1 MNOK

DETNORSKE

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Production

Production & realised oil prices

Issues

• Third quarter production was 1 861 boepd
• Realised oil price USD 77.8 per barrel
• Planned maintenance on Varg, Jotun and Glitne, resulted in reduced output compared to second quarter

DETNORSKE

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Agenda:
- Highlights & production
- Financials
- Exploration
- Development projects
- Outlook & Summary
- Appendix

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Financial position as of third quarter

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Not audited

Elements

• Total cash and tax receivables for refund in 2010/11: 4 980 MNOK
• Interest bearing debt: Short term debt and convertible bond: 3 368 MNOK
• "Net cash" position: 1 612 MNOK, down from 1 691 MNOK at the end of Q2

DETNORSKE

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Profit & Loss Q3 2010

MNOK	Q3 2010	Q2 2010	Comment
Operating revenues	80.6	88.7	Reduced production and oil price
Exploration expenses	209.1	367.2	No dry wells, partially offset by high seismic activity and G&G studies
Change in inventories	0.7	-1.6
Production cost	35.8	39.6
Payroll expenses	7.5	1.4
Depreciation	41.7	44.1	Lower due to reduced production
Write downs	24.4	32.7	Related to relinquishment of PL 256
Other expenses	14.4	14.5	Includes area fees
Operating profit/EBIT	-253.1	-409.3
Net financial items	-55.7	8.0	Realised gain from FX derivatives in Q2
Pre-tax profit	-308.8	-401.4
Tax cost	-228.7	-296.6
Net profit	-80.1	-104.8

Not audited

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Exploration expenses Q3 2010

MNOK	Q3 2010	Q2 2010	Comment
Seismic, well data, field studies, etc.	117.3	1.7
Exploration expenses from license participation	81.0	87.2
Expensed capitalized exploration wells previous years	0.0	9.8
Expensed dry wells this quarter	10.5	293.6	No dry wells booked in Q3 – capitalised exploration expenses was MNOK 248.4
Share of salaries and other operating costs	23.9	28,3
Research and development expenses related to exploration activities	3.2	7.9
Other elements	-26.9
Exploration expenses	209.1	367.2

Not audited

DETNORSKE

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Balance Sheet 30.09.2010

Assets (MNOK)	Q3 2010	31.12.09	Comment
Goodwill	666.5	697.9
Capitalized exploration exp.	1 935.3	893.5	Capitalized Q3 Dalsnuten, Stirby, David, Grevling, Storklakken – MNOK 248
Other intangible assets	1 218.5	1 320.5
Property, plant and equipment	409.0	447.6
Tax receivables (2011)	1 801.3	0
Derivatives	9.9	0
Other financial assets	18.0	18.0
Pre payments	99.6	240.4
Total Fixed Assets	6 158.1	3 617.8
Inventories	17.6	14.7
Trade receivables	25.7	30.4
Other short term receivables	388.1	393.7
Short-term deposits	22.1	22.0
Calculated tax receivable (2010)	2 078.0	2 060.1	Difference is accrued interest
Cash / cash equivalents	1 100.7	1 574.3
Total Current Assets	3 632.2	4 095.1
Total assets	9 790.3	7 713.0

Not audited

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Balance Sheet 30.09.2010 (cont.)

Equity and Liabilities (MNOK)	Q3 2010	31.12.09	Comment
Equity	3 491.3	3 850.5
Pension obligations	24.3	19.9
Deferred taxes	1 885.4	1 173.5
Abandonment provision	233.6	224.5
Deferred revenues	2.8	5.6
Total Provisions
Derivatives	0	21.8
Convertible bonds	413.9	390.6
Short-term loan	2 954.0	1 090.3
Trade creditors	118.2	261.9
Taxes withheld and public duties payable	11.7	22.6
Deferred revenues	0	53.0
Other current liabilities	655.0	598.8
TOTAL LIABILITIES	6 299.0	3 862.5
Total equity and liabilities	9 790.3	7 713.0

Not audited

DETNORSKE

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Agenda:

• Highlights & production
• Financials
• Exploration
• Development projects
• Outlook & Summary
• Appendix

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Secured rig capacity to summer 2014

• Harsh environment rig for deepwater Norwegian Sea and the Barents Sea
• Flexible day rate structure
• USD 450 000/day below 500 meters
• USD 550 000/day in deep waters and the Barents Sea
• Tight market – Two Barents Sea sublets done at higher day rates

Asset in the upcoming 21. round

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Discovery on David in PL 102C

• Gas/condensate discovery
• 1 Bcm of gas proven
• 15 to 20 MBOE in estimated total recoverable volumes
• Potential development is a subsea tie-back to Heimdal, via Byggve / Skirne
• The exploration well can be reused as a production well.
• Water depth 119 meters
• Operator Total
• Det norske holds 10 percent

DETNORSKE

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Considering appraisal well to the north

Pressure data indicates a deeper hydrocarbon column - gas or oil downflank?

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PL 341 Stirby – currently drilling

• Large HTHP prospect
• East Brae, Miller and Gudrun analogue
• Recoverable gas/condensate
• Stirby Upper 150 MBOE
• High case Upper 800 MBOE
• Stirby Deep 190 MBOE
• Main risk
• Reservoir quality
• Stratigraphic seal
• Water depth 120 meters
• Operator Det norske
• Det norske holds 30 percent

DETNORSKE

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PL 392 Dalsnuten – currently drilling

• Gross unrisked resources 600 MBOE
• Main risk is the presence of reservoir
• License with several prospects
• Deep water well - 1 446 meters
• Drilling with Aker Barents
• Operator Norske Shell
• Det norske holds 10 percent

DETNORSKE
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Exploration roadmap*

Comprehensive 2011 drilling campaign

PL	Prospect & (operator)	Net %	Drilling start	Gross resources Mboe
392	Dalsnuten (Shell)	10	ongoing	600
341	Stirby	30	ongoing	150-800
468	Dovregubben	95**	Q4-10	100-220
482	Skaugumsåsen	65	Q1-11	20-90
522	Gullris (BG)	20	Q1-11	700-1700
035	Krafla (Statoil)	25	Q1-11	10-50
535	Norvarg (Total)	20	Q2-11	80-160
416	Breiflabb (E.ON)	15	Q2-11	15-180
265	Aldous Major (Statoil)	20	Q2-11	140-500
356	Ulvetanna	60	Q3-11	70-250
414	Kalvklumpen	40	Q3-11	75-180
450	Storebjørn	75	Q3-11	80-160
460	Steingeita	100	Q3-11
533	Salina (Eni)	20	Q4-11

• A large number of issues may impact the planned drilling plan. This list should thus be viewed only as an indication of the time table
  ** Farm-down of 5% agreed with GDF, pending MPE approval

DETNORSKE

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PL468 - Dovregubben

• Planned drilled in Q4 2010 with Aker Barents
• Located in Møre Basin – close to Ormen lange
• Gross unrisked resources 100-220 MBOE
• Palaeocene play
• Main risk: Trap integrity
• Water depth 275 metres
• Operator Det norske
• Det norske holds 95 percent

DETNORSKE

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PL482 - Skaugumsåsen

• To be drilled by Aker Barents after Dovregubben
• Located on Dønna Terrace – South East of Norne
• Gross unrisked resources 20-90 MBOE
• Jurassic play
• Main risk: Trap integrity
• Water depth 390 metres
• Operator Det norske
• Det norske holds 65 percent

DETNORSKE

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PL522 - Gullris

• Planned drilled with Aker Barents after Skaugumsåsen
• Located in the Vøring Basin
• Gross unrisked resources 700-1700 MBOE
• Upper Cretaceous play
• Main risk: Trap integrity
• Many prospects with DHI in the license
• Water depth 1 260 to 1 300 metres
• Operator BG
• Det norske holds 20 percent

DETNORSKE
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PL 272 – Krafla

• Planned drilled in Q2 2011
• Located between Oseberg and Frigg
• Rotated Jurassic fault blocks
• Estimated gross unrisked resources
• Krafla 10-50 MBOE
• Krafla West dependent on presence of hydrocarbons in Krafla
• Operator Statoil
• Det norske holds 25 percent

DETNORSKE
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The 21st round applications submitted

• Applied for licenses in the Barents Sea and the Norwegian Seas
• Big prospects in new play models
• Det norske would like to see Barents Sea East and Barents Sea North included in the next concession round

DETNORSKE

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Agenda:

• Highlights & production
• Financials
• Exploration
• Development projects
• Outlook & Summary
• Appendix

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Frøy – PDO planned in 2011

• WAG / SWAG depletion strategy revisitted
• Aims at PDO summer 2011
• First oil summer 2014
• Reserves
• Gross 60 MBOE
• Operator Det norske
• Det norske holds 50 percent

DETNORSKE

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Draupne – progressing according to plan

• Studying joint field development solutions with Lundin Petroleum, operator of the Luno field
• Draupne holds estimated gross recoverable reserves of 110 to 150 Mboe
• Draupne and Luno hold an estimated 250 to 300 Mboe, combined
• This decades largest North Sea development
• Aiming for a PDO next year
• Operator Det norske
• Det norske holds 35 percent

DETNORSKE

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Agenda:

• Highlights & production
• Financials
• Exploration
• Development projects
• Outlook & Summary
• HSE

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Outlook & Summary

Exploration

• Two high impact wells around the corner – Dalsnuten and Stirby
• Reassessment of the exploration strategy. Establishing core areas on NCS
• 21st round application contains several large prospects and an award is expected to enhance Det norske’s exploration portfolio and our core area strategy
• Comprehensive drilling campaign lined up for 2011
• Preparing for new opportunities in the Barents Sea

Field developments

• Frøy – delayed schedule due to new subsurface studies
• Draupne progressing well towards PDO
• Jetta – commercial field to be developed as sub sea tie back to Jotun assuming standard processing tariffs.

Financials

• Current exploration program is fully funded
• Strong balance sheet

DETNORSKE

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DETNORSKE

NEST STØRST PÅ NORSK SOKKEL

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It's all about preparedness

TICKER – DETNOR

VP HSE Anita Utseth

DETNORSKE

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Risk based management

• Planning is everything, but we have to be prepared.
• We integrate HSE and emergency preparedness in well design and planning
• Blow out analysis,
• Environmental risk analysis
• Emergency preparedness analysis
• Site specific emergency preparedness analysis
• Risk analysis of well design
• Emergency preparedness plans
• Oil spill contingency strategy and plans

DETNORSKE
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Professionalism

Challenges

• A competent and effective emergency preparedness organization
• Ensure adequate and competent resources for emergency situations
• Ensure continuity in emergency response tasks, training and exercises
• Coordination of emergency response resources

Answer

• Establishment of Operator’s Association for Emergency Preparedness
• Use of Norwegian Clean Sea Association for operating companies (NOFO)

DETNORSKE
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It's all about co-operation

• Initiated and established the Operator's Association for Emergency Preparedness (www.offb.no)
• Professional non profit organisation
• Integrated part of the operator's organisation
• Recognition of Emergency Response as a disciplin

DETNORSKE
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The emergency preparedness organisation

DETNORSKE

SOS INTERNATIONAL

GLOBAL MEDICAL SUPPORT

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Oil Spill Contingency

Membership in NOFO

www.nofo.no

NOFO

• Co-operation of 25 companies
• The operators are responsible
• Close cooperation with NOFO, both analysis and design of the emergency preparedness
• Equipment
• Vessels (inkl OR-vessels)
• People
• Other organisations

Projects initiated by Det norske

• Mapping of special areas (eg. Lovunden and Vikna)
• Contingency plans for the coastal zone (Dovregubben/Smøla)
• Development projects: standard format for strategies for handling oil spill in the coast zone (AOS)
• Training of fishermen: deployment of fishing vessels as tugboats

DETNORSKE

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Contingency plan for Dovregubben

OFFSHORE RESPONSE

• Surveillance from helicopters, airplane, vessels and satellite
• Shipbased oil radar, IR-camera
• Mobilisation of Sintef within 48 hours

• Dedicated field system
• 8 oil spill combat systems in barrier 1 and 2 within 24 hours
• Access to chemical dispersants
• Mobilisation of tankers for disposal – within 9 hours

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DETNORSKE

NEST STØRST PÅ NORSK SOKKEL