Energy SpA — Earnings Release 2020

Feb 19, 2021

Q4 2020

CEO Carl K. Arnet CFO Knut R. Sæthre COO Lin G. Espey

19 February 2021

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Highlights

EBITDA of USD 28 million with two liftings completed

Capital raise of USD 75 million in Jan 2021

Resumed project execution activities

• Completed two liftings of 1.1 Mbbls (net BWE) at a price of USD ~46 per barrel
• Average daily production of ~13.5kbbls
• Preparing for drilling of the Hibiscus extension exploration well before completing Tortue phase 2
• Progressing preparations for Hibiscus and Ruche development with reduced CAPEX and time to first oil
• Managing and closely monitoring the COVID-19 pandemic and impact on operations

Zero-harm objective for people and environment

Minimizing impact to environment Working for local society Sound governance

• Full Year 2020:
• ‒ BWE: 0 LTIs
• ‒ BWE's major subcontractors: 5 LTIs with 750k hours worked
  • o 2 LTIs on FPSO Adolo (1 in January and 1 in December)
  • o 3 LTIs in one event on the SBM Installer in March 2020 during Tortue Phase 2 project
• ‒ Zero environmental incidents

Estimated GHG emission-savings from redeployment of existing FPSO¹vs. newbuild

1) FPSO BW Adolo case study based on Co2 emission tied to steel consumption and operations

NSAI Reserves Update

• Dussafu reserve update reflecting mainly adjustment for annual production rate of 5.2 million bbls
• Hibiscus extension exploration well planned in Q2 2021 a potential trigger for upwards revision
• Increase in Maromba 1C reserves with stable 2C reserves

Gross Dussafu Reserves (MMBBLS)

	YE2020			YE 2019
Category	1P	2P	3P	1P	2P	3P
Reserves	73.5	104.9	134.8	76.9	112.4	142.6
	1C	2C	3C	1C	2C	3C
Contingent resources	15.6	36.2	65.0	15.1	35.7	63.6

Gross Maromba Contingent Reserves (MMBBLS)

	YE2020			YE 2019
Category	1C	2C	3C	1C	2C	3C
Development Pending	70.4	98.0	131.3	53.8	98.6	141.6
Development Unclarified	31.2	48.1	74.9	28.9	46.8	74.1
Total	101.6	146.1	206.2	82.7	145.4	215.7

1C increase by 16.6 mmbls in development pending category

Production outlook

Gross production estimate bbls/day¹ Net production estimate bbls/day¹

Dussafu

Stable operations and restarting Tortue phase 2

• Q4 gross production 1.24 million bbls, equal to ~13,500 bbls/day
• ‒ Completed annual maintenance program in October 2020
• Q4 OPEX at USD ~23 per barrel including USD 2.2 million of additional COVID costs
• Full year OPEX of USD 20 per barrel
• ‒ Impact from extended COVID costs and restrictions
• ‒ Production impact of complying with OPEC quotas
• Completion and tie-in of Tortue phase 2 wells DTM-6H and DTM-7H after Hibiscus Extension well
• First oil from the new Tortue wells expected Q3/Q4 2021

Hibiscus development

• Planned drilling campaign to start March/April 2021
• DHIBM-2 exploration well targeting Hibiscus Extension is the first well in the upcoming campaign
• The well result will decide the location of the Hibiscus Alpha and has the potential to triple the reserves of the Hibiscus reservoir
• Jack-up conversion reduces investments by USD ~100 million, time to first oil and environmental footprint of the development

Hibiscus/Ruche development program

		Q1 2023
Feed phase
Basic and detailed engineering
Rig reactivation
Offshore Installation (OI) refurbishment and modifications	Topside Process Skids Manufacturing TPS integration OI refurbishment and modifications, MC, pre-comm and comm
Procurement	Procurement and delivery of line pipe, coating, valves etc.
	OI delivery to offshore location
Sail away and	Drill and complete 1st well
field installation	Rigid pipelay
	Surf tie-in
	Hook-up, commissioning and 1st oil

Dussafu production forecast

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

• 2020 production of 5.2 million bbls gross

• ‒ Equal to an average ~14,100 bbls/day
• ‒ Impact from COVID-19, maintenance and compliance with OPEC reductions
• ‒ Two liftings completed in Q4
• 2021 production expected at 5.2 5.8 million bbls gross

Quarterly gross production (kbbls/day) Actual and planned quarterly lifting schedule to BW Energy:

Exploration program

• Planning two exploration wells per year for the coming five years
• Coming drilling program will focus on the Hibiscus area
• Hibiscus Extension
• One optional exploration well
• Work ongoing to high grade the next targets for 2022 and onwards

Jasmine Alpha (former Balder) on HLV Osprey

Maromba

Maromba - Southern Campos Basin - progress

• Field Development Plan approved by ANP
• Progressing project towards environmental approval (IBAMA)
• ‒ Site and soil survey planned for Q1 2021
• Optimising field CAPEX and OPEX
• Reducing time from execution start to first oil
• Pursuing tax reductions by marginal field status
• On track to FID for phase 1 in Q1 2022 with a breakeven below USD 40 per bbl oil price while achieving 15% IRR (incl. remaining acquisition costs)

Maromba Long Term Production Potential

• Maastrichtian sandstones are regionally proven reservoirs having produced more than a billion of barrels of oil in the region
• Independent assessment of primary Maastrichtian sandstone P50 oil-in-place in line with internal estimate
• ‒ NSAI oil-in-place at 495 mmbbl with 2C reserves at 98 mmbl
• Production test conducted by previous operator proved production capability
• Carbonate reservoirs provide longer term upside potential and are on active production in other areas of the Campos Phase 1

Kudu

• Kudu gas is trapped in aeolian sandstones at 4,400 meters depth • Reservoir located 130 km from land and 170 m water depth

interest after approval

Kudu Status

• Primary monetisation strategy involves providing power to Namibia and/or South Africa or providing gas directly to South Africa

‒ NAMCOR (government oil entity) will hold 5% carried

• Namibia receives a majority of its power from South Africa. South Africa forecasts internal power shortages and has signalled to Namibia reduced power deliveries and escalating power rates

Q4 Financials

Income Statement – Q4 2020

USD million	Q4 2020	Q3 2020	Change
Operating revenue	67.8	38.3	29.4
Operating expenses	(39.5)	(16.1)	(23.4)
EBITDA	28.3	22.2	6.1
Depreciation	(13.1)	(8.0)	(5.1)
Depreciation - ROU	(7.6)	(9.7)	2.1
Amortisation	(0.2)	(0.2)	-
Impairment	(2.5)	-	(2.5)
Gain/(loss) sale of assets	-	-	-
Other expenses	(23.3)	(17.8)	(5.6)
Operating profit/(loss)	4.9	4.4	0.5
Interest income	0.2	0.1	0.1
Interest expense	0.0	-	0.0
Lease liability interest expense	(3.6)	(3.1)	(0.4)
Other financial items	1.3	0.2	1.1
Net financial income/(expense)	(2.0)	(2.8)	0.8
Profit/(loss) before tax	2.9	1.6	1.3
Income tax expense	(8.0)	(8.4)	0.4
Net profit/(loss) for the period	(5.1)	(6.8)	1.6

• EBITDA increased by USD 6.1 million mainly due to 550 kbbls more sold
• Depreciation increase due to additional barrels sold
• Impairment related to Kudu Farm-in

• MTM for interest rate swaps and FX gains

Income Statement - 2020

USD million	2020	2019	Change
Operating revenue	160.3	282.4	(122.1)
Operating expenses	(73.3)	(90.7)	17.4
EBITDA	87.0	191.7	(104.7)
Depreciation	(34.7)	(48.2)	13.5
Depreciation - ROU	(35.5)	(25.9)	(9.7)
Amortisation	(0.6)	(0.6)	-
Impairment	(13.2)		(13.2)
Gain/(loss) sale of assets	(1.2)	0.3	(1.4)
Other expenses	(85.2)	(74.5)	(10.7)
Operating profit/(loss)	1.8	117.3	(115.5)
Interest income	0.9	2.0	(1.1)
Interest expense	0.0	(0.7)	0.7
Lease liability interest expense	(12.6)	(9.0)	(3.7)
Other financial items	(2.3)	1.7	(4.0)
Net financial income/(expense)	(14.0)	(6.0)	(8.0)
Profit/(loss) before tax	(12.2)	111.3	(123.5)
Income tax expense	(28.9)	(38.8)	9.9
Net profit/(loss) for the period	(41.1)	72.5	(113.6)

• 900k decrease in barrels sold in 2020 and an average negative price variance of USD 22 per barrel
• Lower opex per barrel due to higher production in 2020
• Reduced depreciation due to lower volumes sold in 2020 along with a lower DD&A rate
• Increase in ROU depreciation mainly due to Adolo lease extension in Q4 2019
• Non-Cash impairment for Kudu
• Increase in discount rate from 4.2% to 5.3%

Balance Sheet

ASSETS	Q4 2020	Q3 2020	Change
ASSETS	Q4 2020	Q3 2020	Change
Property and other equipment	0.5	0.5	(0.0)
Property and other equipment	0.5	0.5	(0.0)
Right-of-use assets	226.5	225.0	1.5
Right-of-use assets	226.5	225.0	1.5
E&P tangible assets	239.0	237.3	1.7
E&P tangible assets	239.0	237.3	1.7
Intangible assets	110.2	107.1	3.2
Intangible assets	110.2	107.1	3.2
Other non-current assets	3.3	7.5	(4.2)
Other non-current assets	3.3	7.5	(4.2)
Total non-current assets	579.6	577.4	2.2
Total non-current assets	579.5	577.4	2.2
Inventories	8.4	18.3	(9.9)
Inventories	8.4	18.3	(9.9)
Trade receivables and other current assets	54.6	16.3	38.3
Trade receivables and other current assets	54.6	16.3	38.3
Cash and cash equivalents	120.6	145.3	(24.7)
Cash and cash equivalents	120.6	145.3	(24.7)
Total current assets	183.6	179.9	3.7
Total current assets	183.6	179.9	3.7
TOTAL ASSETS	763.2	757.3	5.9
TOTAL ASSETS	763.1	757.3	5.9

EQUITY AND LIABILITIES	Q4 2020	Q3 2020	Change
EQUITY AND LIABILITIES	Q4 2020	Q3 2020	Change
Shareholders' equity	443.3	448.4	(5.1)
Shareholders' equity	443.2	448.4	(5.2)
Total equity	443.3	448.4	(5.1)
Total equity	443.2	448.4	(5.2)
Deferred tax liabilities	4.9	4.4	0.5
Deferred tax liabilities	4.9	4.4	0.5
Asset retirement obligations	13.0	12.9	0.1
Asset retirement obligations	13.0	12.9	0.1
Long-term lease liabilities	233.0	231.4	1.6
Derivatives	0.4	1.7	(1.2)
Long-term lease liabilities	233.0	231.4	1.6
Total non-current liabilities	251.4	250.4	1.0
Derivatives	0.4	1.7	(1.2)
Total non-current liabilities	251.4	250.4	1.0
Trade and other payables	48.9	42.5	6.4
Short-term lease liabilities	19.1	15.9	3.2
Trade and other payables	48.9	42.5	6.4
Tax liabilities	0.5	0.1	0.4
Short-term lease liabilities	19.1	15.9	3.2
Total current liabilities	68.5	58.5	10.0
Tax liabilities	0.5	0.1	0.4
Total current liabilities	68.5	58.5	10.0
Total liabilities	319.9	308.9	11.0
Total liabilities	319.9	308.9	11.0
TOTAL EQUITY AND LIABILITIES	763.2	757.3	5.9
TOTAL EQUITY AND LIABILITIES	763.1	757.3	5.8

• Inventory decrease due to reduced overlift position
• Increase in trade receivables due to December lifting paid in January
• USD 75 million equity issue completed in Q1 2021

Investment in Assets (CAPEX)

2020 Cash Flow

24

Summary

Key value catalysts

• Hibiscus Extension
• Seismic reprocessing evaluation

• Up to 10 additional exploration wells planned from 2021 until 2026

• Tortue Phase 2 Q3/Q4 2021: ~8,000 bbls/day peak gross production

• Hibiscus / Ruche development with first oil Q1 2023

• Hibiscus / Ruche is expected to lift Dussafu production to FPSO nameplate capacity (~40,000 bbls/day)

• ANP approved FDP

• Target FID Q1 2022
• First oil expected in 2024